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How the U.S. economy turned six good jobs into bad ones

How the U.S. economy turned six good jobs into bad ones
The rise and fall of wood-product factory workers tracks closely to the U.S. housing bubble and subsequent mortgage crisis. Above, a truck hauls logs to a lumber mill. (John Raoux / Associated Press)

Changes in the labor market have upended myriad jobs that used to pay well, dragging down wages and leaving millions of American workers feeling misled and frustrated.

To illustrate this dynamic, we isolated six industries that provided an above-average weekly paycheck in the 1990s but now pay less than an average wage. As policymakers try to understand why wages aren't growing faster despite nearly record-low unemployment, this is one part of the story.

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These downgraded jobs have one thing in common: They don't require a college degree. The share of workers with only a high school education is rising in all six jobs and now constitutes the largest portion in all but one of them, according to labor analytics firm Burning Glass Technologies.

The careers used to provide less educated workers an avenue to the middle class, but not anymore. And the well-paying jobs of today are often in fields such as healthcare and finance, which require additional education and training.

"Warehousing and distribution were once higher-skilled jobs with good pay, but the pay has gone down, even though the work still requires a tremendous amount of effort," said Diane Swonk, chief economist at professional services network Grant Thornton. "People aren't earning less because they are lazy."

Although these six job categories pay significantly less than they did in the 1990s, most have expanded hiring. They have also reduced union participation. Here's a deeper look at the forces that brought them down.

Music and movie industry

Online piracy laid waste to the music industry. We can blame it for the "lion's share" of the revenue lost during the era we examined, according to a 2017 Journal of Economic Perspectives paper from University of Minnesota economist Joel Waldfogel, author of "Digital Renaissance: What Data and Economics Tell Us about the Future of Popular Culture."

But there's another, less apocalyptic reason the digital revolution has slashed music and movie wages.

Digitization made music and movies far cheaper to produce, distribute and promote, Waldfogel wrote. It broke the stranglehold of movie studios and music labels, which were once the only institutions that could afford the $1-million cost of bringing an album to market in 2010 or the $106 million it cost to produce a major film in 2007.

As a result, Waldfogel said, "the number of new movies and sound recordings has skyrocketed in the past few years." Most of those new products are coming from independent labels and smaller studios.

At the same time, employment in the music and motion-picture industries has expanded. The new jobs pay less than when gatekeepers ruled the Earth, but Waldfogel found that as a whole, the industry is producing an ever-increasing number of well-reviewed movies and albums.

The major labels and studios took a hit, Waldfogel wrote, but because "consumers are now awash in products that they find desirable," it appears that "digitization has ushered in a golden age of music, movies, books, and television programming."

Repair work

Of all repair workers, those who fix, install and maintain refrigerators, chain saws, televisions and assorted household goods have seen their wages fall the quickest.

The internet is a likely culprit, but the disruption is different from how technology transformed the music and warehouse industries. The Wall Street Journal reported in 2015 that repair workers were being squeezed by frugal customers and the rise of a YouTube-enabled "do-it-yourself" repair ethic. The trend appears to be continuing: Home Depot's latest earnings hit an all-time high.

A diverse and growing number of customers are taking repairs into their own hands, watching how-to videos and ordering parts online. And when they can't fix it themselves, they're more likely to simply buy one of today's relatively cheap new appliances rather than call the repair shop. Appliance prices have fallen 21% since 1992, even as consumer prices have risen 62.3% overall, Commerce Department figures show.

Auto industry

The auto industry, long a bedrock of middle-class U.S. jobs, has been hit by two distinct forces: foreign competition and the internet, which dragged down pay across the industry.

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Companies such as Advance Auto Parts have struggled to keep up with the low prices and convenience of online retailers like Amazon.com. Advance's stock peaked in 2015 and has not topped that since as investors worry that brick-and-mortar stores are in long-term decline. Prices for car parts have fallen since the end of 2014, according to government data.

"I've been working at AutoZone for eight years, and I still make just $30,000 a year," said Jason Clawson, a 34-year-old from Ohio who recently completed weekend classes to become a truck driver, a job he thinks will double his pay.

Used-car prices are at a 13-year high, Edmunds.com says, and sales remain strong, but shoppers who used to go to a car lot are increasingly buying online or at an auction, hurting the commissions used-car dealers once enjoyed.

Warehouse jobs

Employment at warehouses has soared, rising from 515,000 in 2000 to 1,032,000 today. Warehouses have become critical links in the online retail and global supply chains that ship parts from all over the globe to offices and homes. Yet annual pay for warehouse workers (excluding managers) has fallen from a peak of about $42,500 in 2000 to about $38,000 now, adjusted for inflation.

Swonk, the Grant Thornton economist, says it's the result of a highly paid industrial sector transforming into a business dominated by lower-paying retail firms. The large decline in union jobs and rise of temporary workers have also lowered pay. Companies see workers as easy to replace, she says, so there is little reason to raise pay to keep them around.

Tracy, who didn't give her last name for fear of retribution, took a job at a J. Crew fulfillment center when she moved to southern Virginia last year. The company was hiring ahead of the holiday spree, and she thought it would be an interim job until she found something else.

"It's not anything I planned on doing or want to do long-term. I'm 54 now, and it's very physical. You stand the whole time," Tracy said. She had hoped to move on, but she's still there months later, unable to find anything else. She earns $11 an hour packing orders and dealing with returns.

Food manufacturing

Food manufacturing is a different industry than it was 20 years ago. There's a lot more meat involved. And because slaughterhouses tend to pay less than other food work, overall pay has fallen.

Jobs in cheese factories and in fruit-and-vegetable canneries or packing plants still pay relatively well. But there are fewer of them. Lower-paying jobs in slaughterhouses, meatpacking plants and, to a lesser extent, bakeries have taken their place.

Author Lynn Waltz wrote in the newsletter PostEverything this year that slaughterhouse pay has fallen as major manufacturers have moved jobs from urban union strongholds to cheaper rural areas in less union-friendly states. Exploitation of workers in the U.S. illegally has also kept wages down, Waltz said.

Lumber-related jobs

The rise and fall of sawyers and other wood-product factory workers tracks closely to the U.S. housing bubble and subsequent mortgage crisis.

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Lumber mills bled jobs and slashed paychecks as the housing market collapsed. Wages are now beginning to recover, but there are far fewer woodworkers around to earn them.

U.S. lumber-related industries have been hammered by the cheap Chinese imports that flooded into the United States from 1990 to 2007. Wood products and furniture were at the epicenter of the shock, suffering more than almost any other industries, according to MIT economist David Autor and his collaborators.

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