Bill Watkins: We need more low-wage jobs


If, during conversation with a Sacramento insider, you compare Texas' job growth with California's job growth, the insider likely will respond: "But they are all low-wage jobs."

The correct response to this statement is, "Perfect!"

That might sound heartless, but it's not. The complaint about growth in low-wage jobs actually is the heartless statement. It's one of those statements that sound compassionate, until you actually think about it. I'll explain:

People come in many varieties. Some of us can hit major league pitching, or solve differential equations in our heads, or sing opera. Most of us can't do any of these things, but there are other things we can do well. There is a distribution across skills.

Productivity is no different. It's a function of endowed skills and human capital. We have high-productivity people, low-productivity people and many in between.

Because we value all people, we don't abandon any. We want each to gain the dignity, the self-confidence and the other benefits that come from having a job. Because wages are dependent on productivity, we need some low-wage jobs. Otherwise, low-productivity workers would be unemployed.

So, how many low-wage jobs do we need? We need a lot more than we have.

This most-recent recession has hurt low-productivity workers far worse than it has hurt high-productivity workers. The Bureau of Labor Statistics' Employment Situation Report for February 2013 stated the national unemployment rate is 11.2 percent for people at least age 25 with less than a high school diploma, while 3.8 percent for people with at least a bachelor's degree. People ages 16-19 have an unemployment rate of 25.1 percent, versus 7.7 percent for people at least age 20.

Minority workers have also suffered disproportionately in this recession. The Hispanic unemployment rate is 9.6 percent; while the black unemployment rate is 13.8 percent. Blacks ages 16-19 endure an unemployment rate of 43.1 percent. For them, any job is an improvement.

Conversations with employers are consistent with these data. California employers that I talk to complain of an inability to find workers with the skills employers need. This is while California has an unemployment rate about 25 percent above the national rate. Finding employees with technical skills is so difficult, that Silicon Valley employers are constantly advocating for additional immigration to meet the skills gap.

Sacramento insiders will respond that low-wage jobs don't pay enough to afford housing in California. California's leadership is dominated by people from the San Francisco Bay Area. If these people bothered to visit California's vast inland areas, where the state's unemployment rates are highest, they would find plenty of affordable housing.

Even in the most desirable coastal areas, prices are higher than they need to be, because of policies that limit supply.

But, think about that argument. They are saying that low-wage jobs don't pay enough to live in California. So, we shouldn't have low-wage jobs. That sort of thinking has led to the current mess. California has about a third of the nation's welfare recipients and the nation's highest poverty rate.

What exactly should we do for these people? Give them a ticket to Texas? I don't think so. I think we need to create the economic environment that would allow them find work and afford a home.



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