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: Employment & Wages

Chart Jun 13, 2018

Many firms have substantial power in labor markets.

Many firms have at least some wage-setting power derived from the willingness of their employees to accept lower wages than they could earn elsewhere. Economists attempt to quantify this employee willingness to accept lower wages in terms of the so-called labor supply elasticity. That is, what percent lower employment would a firm expect if it offered 1 percent lower wages? In general, firms face relatively inelastic labor supply.

Chart Jun 13, 2018

The entrepreneurship rate has fallen by almost half for workers with a bachelor’s degree.

This chart examines trends in entrepreneurship—defined here as self-employment with at least 10 employees—by the educational attainment of entrepreneurs. For people with more than a high school diploma, entrepreneurship is a less common vocation than it was 25 years ago. The decline is especially pronounced among those with advanced degrees: in 1992 4.0 percent of 25- to 54-year-olds with an advanced degree (beyond a bachelor’s) were entrepreneurs. By 2017 this rate had fallen to 2.2 percent.

Chart Jun 13, 2018

Occupational licensing is common and associated with diminished worker mobility.

More than a fifth of all employees hold licenses, but the fraction varies considerably across professions. Health-care practitioners and legal workers are the most likely to be licensed, with 73 and 61 percent of workers licensed, respectively. Additionally, licensed workers—who generally must pay to be relicensed after an interstate move—are much less likely to move across state lines than are comparable workers without licenses, but only slightly less likely to move within their state.

Chart Sep 26, 2017

Labor Market Slack has Declined Since the Great Recession

While in the long run real wage growth depends on productivity and the distribution of gains from productivity, over shorter time horizons wage growth can be determined by the supply and demand for labor. When there is extensive slack in the economy—such as during a recession or the early phase of a recovery, when labor and capital are underutilized—wage growth can be temporarily lower. At these times, there are more unemployed workers and hiring demand is low, both of which put downward pressure on wages.

Chart Sep 26, 2017

Nominal Wage Growth is Lower than in Past Business Cycles

This figure shows that nominal annual wage growth has been just 2.4 percent since the start of the Great Recession, contrasting with nominal wage growth above 3.0 percent in each of the previous business cycles. Typically, nominal wage growth rises later in expansions and falls during recessions, while real wage growth may jump up or down with variation in inflation. But the most recent expansion has seen little uptick in nominal wage growth, especially in contrast to the previous three expansions.

Chart Dec 19, 2013

Breakdown of Family Characteristics, by Income Relative to the Federal Poverty Level (FPL)

Household composition of families in the struggling lower-middle class varies substantially from the household composition of families in poverty. The composition of the struggling lower-middle class—defined here as working-age families with children under age eighteen whose income places them between 100 and 250 percent of the FPL—is markedly different from families in poverty in terms of marriage and presence of earners.

Chart Jul 18, 2013

Probability of Children’s Income Level, Given Parents’ Income Level

While social mobility and economic opportunity are important aspects of the American ethos, the data suggest they are more myth than reality. In fact, a child’s family income plays a dominant role in determining his or her future income, and those who start out poor are likely to remain poor. This figure shows the chances that a child’s future earnings will place him in the lowest the or the highest quintile depending on where his parents fell in the distribution (from left to right on the figure, the lowest, middle, and highest quintiles). 

Chart May 7, 2013

Ratio of Government Employment to Population

While the private sector has added jobs to the economy in every month since March 2010, a total increase of approximately 6.8 million jobs through April 2013, the public sector has contracted. This figure shows the ratio of government employment to the civilian non-institutional population going back to 1980. For the twenty years prior to the Great Recession, this ratio stayed relatively constant, but since then it has dropped precipitously (except for the temporary uptick in 2010 when government employment rose to accommodate demand for U.S. Census workers). 

Chart Apr 5, 2013

Median Earnings and Distribution of Students by Attainment in Community Colleges

Many workers can benefit substantially from worker training programs, which provide education and skill development that lead to increased economic opportunities and better jobs. Students who earn two-year degrees in a high-return field, four-year degrees after a two-year degree, or certain career-oriented certificates, earn median salaries of $34,000 or more per year. Students who earn two-year degrees in low-return fields or who do not complete their programs earn around 33 percent less. 

Chart Jan 15, 2013

Number of Unemployed Per Job Opening

Millions of Americans lost their jobs during the recession, and even though the economy has been recovering for several years, it is still more difficult for unemployed individuals to find a job now than it was before the recession. One way to observe this is to measure how many unemployed Americans there are per job opening. As this graph shows, although we have come down from the height of the recession—when there were more than six unemployed people per job opening—we still have not reached pre-recession employment levels.

Chart Jan 15, 2013

Return on Investment to a Bachelor’s Degree

Despite widespread claims that a college degree is no longer worth the rising price of tuition, a bachelor’s degree still has about the same return on investment today as it did in the 80s. College still pays for itself, and then some; it will earn you, on average, a 16 percent return, which is a higher rate of return than on investments in the stock market (6.8 percent), corporate bonds (2.9 percent), gold (2.3 percent), long-term government bonds (2.2 percent), or housing (0.4 percent).