Entry-level jobs used to be the first rung on the ladder to success, but many workers are stuck there.
WASHINGTON – For years, many Americans followed a simple career path: Land an entry-level job. Accept a modest wage. Gain skills. Leave eventually for a better-paying job.
The workers benefited, and so did lower-wage retailers such as Wal-Mart: When its staffers left for better-paying jobs, they could spend more at its stores. And the U.S. economy gained, too, because more consumer spending fueled growth.
Not so much anymore. Since the Great Recession began in late 2007, that path has narrowed because many of the next-tier jobs no longer exist. That means more lower-wage workers have to stay put. The resulting bottleneck is helping widen a gap between the richest Americans and everyone else.
“Some people took those jobs because they were the only ones available, and haven’t been able to figure out how to move out of that,” Bill Simon, CEO of Wal-Mart U.S., acknowledged in an interview.
If Wal-Mart employees “can go to another company and another job and make more money and develop, they’ll be better,” Simon explained. “It’ll be better for the economy. It’ll be better for us as a business, to be quite honest, because they’ll continue to advance in their economic life.”
Yet for now, the lower-wage jobs once seen as steppingstones are increasingly being held for longer periods by older, better-educated, more-experienced workers.
The trend extends well beyond Wal-Mart, the nation’s largest employer, and is reverberating across the U.S. economy. It’s partly why average inflation-adjusted income has declined 9 percent for the bottom 40 percent of households since 2007, even as incomes for the top 5 percent now slightly exceed where they were when the recession began late that year, according to the Census Bureau.
Research shows that occupations that once helped elevate people from the minimum wage into the middle class have disappeared during the past three recessions dating to 1991.
One such category includes bookkeepers and executive secretaries, with average wages of $16.54 an hour, according to the Labor Department. Since the mid-1980s, the economy has shed these middle-income jobs — a trend that’s become more pronounced with the recoveries that have followed each subsequent recession, according to research by Henry Siu, an economist at the University of British Columbia, and Duke University economist Nir Jaimovich.
That leaves many workers remaining in jobs as cashiers earning an average of $9.79 an hour, or in retail sales at roughly $10.50 — jobs that used to be entry points to higher-paying work. Hourly pay at Wal-Mart averages $8.90, according to the site Glassdoor.com. (Wal-Mart disputes that figure; it says its pay for hourly workers averages $11.83.)
Since the Great Recession began, the share of U.S. workers employed by the retail and restaurant sector has risen from 16.5 percent to 17.1 percent. “It really has contributed to this widening of inequality,” Siu said.
The shift has injected new pressures into the economy. Older and better-educated retail and fast-food workers have become more vocal in pressing for raises. Labor unions helped launch protests last year against such employers as Wal-Mart, McDonald’s and Burger King.
Fewer teenagers are staffing cash registers, prepping meals or stocking shelves. Replacing them are adults, many of whom are struggling with the burdens of college debt or child rearing. Some are on the verge of what was once envisioned as retirement years.
They are people like Richard Wilson, 27, in Chicago. More than 2 ½ years ago, a Wal-Mart store manager spotted Wilson cleaning the cafeteria at Liberty University in Virginia.
A double major in biblical studies and business communications, Wilson had maxed out with $50,000 of student loans. He said the recruiter suggested that a management job could eventually be within reach for him because “Wal-Mart is where people’s dreams become a reality.”
Wilson moved home to Chicago and now works at a boutique Wal-Mart specializing in groceries. He earns $9.45 an hour and has applied for promotions. So far, no success.