Job Creation in the United States: Good Jobs or Bad?

Abstract

Despite a record of sustained growth in employment in the United States, there is longstanding concern that the new jobs are of poor quality, implying that the quality of the stock of jobs in the economy is deteriorating. In fact, it is difficult to define a new job, much less identify such jobs and evaluate their quality. In this study, I define new jobs operationally as worker-firm matches that have begun within the last year (i.e., tenure less than one year), and I investigate the extent to which the quality of new (low tenure) jobs relative to old (higher tenure) jobs has changed over the period from 1979-1996. I consider three dimensions of quality: real wages, the rate of part-time employment, and the rate of coverage by employer-provided health insurance. The empirical analysis relies on data from eight mobility and benefit supplements to the Current Population Survey over the period studied. The results are clearcut. Real hourly wages on new jobs have deteriorated slightly relative to wages on older jobs, but the general patterns of the wage distribution on new jobs have changed in ways similar to the overall wage distribution (a large increase in the return to education driven by a large decline in wages for less-skilled workers). There is no evidence of an increase in the rate of part-time employment on either new jobs or old jobs so that the quality of new jobs has not changed absolutely or relative to the quality of older jobs in this dimension. The quality of new jobs has deteriorated substantially for some workers in the provision of employer-provided health insurance. Less-educated workers have become substantially less likely to be covered by or offered health insurance by their employer, and the decline is particularly large on new jobs. There has been a smaller decline in employer-provided health insurance coverage for more-educated workers on both old and new jobs, but the decline is no larger on new jobs than on old jobs. On balance, there has been a decline in the quality of jobs for less-skilled workers, as measured by the availability of a key fringe benefit, that is especially severe for new jobs and that reinforces the well-known deterioration of the labor market for less-skilled workers more generally. There has been relatively little change in the quality of jobs available to more highly-skilled workers, either on new or on old jobs.