The percentage of low-wage jobs paying less than $11,611 a year has increased and the number of middle-wage jobs has dropped significantly during the last decade, the Senate Budget Committee reported Monday.
It said that the South, the Midwest and the Rocky Mountain regions suffered the most from "downward wage polarization" but noted that, contrary to popular belief, even California and the Pacific Coast were affected.
The committee's report said that between 1979 and 1987, the proportion of American workers earning less than $11,611, the government's official poverty line for a family of four, has increased from 32.4% to 34.2%, or 1.8 percentage points.
Those in high-paying jobs of $46,444 a year or more grew 0.8 percentage points to 4.5%, while middle-income jobs fell from 64% to 61.3%.
Could Affect Debate
The staff study, released by committee Chairman Lawton Chiles (D-Fla.), could add fuel to the current presidential debate over the economic well-being of Americans. Vice President George Bush has campaigned heavily on the job gains made during the Republican Administration's tenure, while Democratic challenger Michael S. Dukakis has charged that many Americans have been left behind amid the economic growth.
Sen. Pete V. Domenici (R-N.M.), ranking Republican on the Budget Committee, immediately attacked the report, calling it "misleading and inaccurate."
"The problem is that Democratic critics of the Administration's economic policies have been totally frustrated by the success of our economy," he said in a Senate speech. "The truth remains that most of the new jobs created during the expansion have been in occupations that pay well. Only 8% of the jobs generated by this expansion pay under $7,000 annually . . . . I trust that this report, like so many political documents at this time of the year, will sink quickly out of sight," he said, alleging that its authors used "questionable methodology, with a clear bias."
Called for Objectivity
However, Chiles said in a Senate speech that he instructed his staff to be "objective and accurate." John Hilley, the committee staff member in charge of the study, said that the timing of its publication was governed by new Census Bureau data that was not available until the first week in September.
"The report proves (that) the share of middle-wage jobs has decreased significantly during the last decade," Chiles said in remarks to the Senate. "Although there is a greater share of high-wage jobs now than eight years ago, the share of low-wage jobs has increased by twice as much.
"Since 1979, over 50% of the net increase in employment was paying below poverty level wages."
"The sad truth is that jobs paying below the poverty level are growing faster than any other kind," he added. Chiles said that if such a trend exists during a period of economic growth, "I fear what a more uncertain economic future might bring the American worker."
On an hourly basis, pay of $5.80 an hour or less was classified as low-wage, while the range for middle-wage jobs went from $5.81 to $23.20 an hour and high-wage jobs were all those above that rate.
Except for the East, Chiles said, wages have moved "in the wrong direction" in the country, with some regions undergoing "wage impoverishment," with percentages of high-wage and middle-wage jobs declining and only low-wage jobs showing an increase.
The study showed that New England states are among the best-off, with an increase of 3.8 percentage points in middle-wage jobs, an increase of 1.8 percentage points in high-wage jobs and a decline of 5.6 percentage points in low-wage jobs since 1979.
Massachusetts, home state of Dukakis, enjoyed "wage enrichment," with low-wage jobs accounting for 7 percentage points less at the end of the eight-year study period, the report said.
Show Downward Spiral
In contrast, industrial states of the Midwest--Illinois, Ohio, Indiana, Michigan and Wisconsin--showed a downward spiral. The number of low-wage jobs in that region rose by 5 percentage points while middle-wage jobs declined by 5.5 points.
The Southern states of Alabama, Kentucky, Mississippi and Tennessee showed similar results, while the "oil patch" region of Louisiana, Oklahoma, Texas and Arkansas had an increase of 2.2 percentage points in low-paid jobs and a 2.3-point decline in middle-wage jobs.
Overall, the Pacific Coast region, including Alaska and Hawaii as well as the three West Coast states, showed an increase of 2.8 percentage points in low-wage work. A drop of 4 percentage points in middle-wage jobs was offset partially by a gain of 1.2 percentage points in high-paying jobs.
In California, those in the lowest paid category increased by 2.1 percentage points to 29.6% of total employment, the study showed. Middle-wage jobs declined 3.6 points to 64% and high-paid jobs rose 1.5 percentage points to 6.5% of the work force.