The recession of 2007-08 that eliminated over 8 million jobs now seems like a long time ago. Job growth has been steady since 2011, (finally) resulting in levels of unemployment that are near historic lows. But many of the jobs created have been part-time and low-paid. There are also concerns with long-term unemployment, under-employment, youth unemployment, and discouraged workers who have dropped out of the labor market. Corporate profitability is at record levels, but worker earnings have been stagnant until very recently.
Looking to the future, a number of important challenges face the U.S. economy, including a worsening infrastructure, high medical costs, government budget deficits, and an uncertain global economic environment. Any positive effects of the Trump administration's earlier tax cuts and government spending will likely weaken in the coming years, and if interest rates rise, then economic growth could slow further. Any continuing or new trade wars will also place a drag on the economy, and many economists predict slower economic growth over the next couple of years.
The U.S. economy also continues to be characterized by high levels of inequality. After adjusting for inflation, the purchasing power of today's average hourly wage is about the same as it was in the 1960s, even though productivity has increased significantly. In the decade of the 2010s, wages and salaries have been at their lowest share of U.S. gross domestic product since data collection began in 1947, while the share for corporate profits has been at record highs. The economic divide between those with and without college degrees as well as the uneven economic opportunities for women and members of under-represented groups are also areas of significant concern.
There has been a significant backlash against immigrants in the United States and around the world. It is illegal for companies to hire undocumented workers (those without proper work authorization), but some employers hire immigrant workers to keep labor costs low. In the Twin Cities hospitality industry, estimates of the fraction of the workforce that are immigrants are as high as 35 percent. It is estimated that the hospitality industry is the largest employer of not only immigrants, but also of welfare-to-work program participants and single parents.
On the public policy front, there have been numerous union and activist-led campaigns (such as Fight for $15) to increase the minimum wage at the state and local level. The Minnesota state minimum wage now increases annually based on inflation. In 2017, Minneapolis enacted a city ordinance increasing the city minimum wage to $15 by 2022 for large employers (those with more than 100 employees). Groups that support workers are also lobbying hard for paid sick leave legislation. As a result, since 2017 a Minneapolis city ordinance requires employers within the city to provide paid sick leave.
Labor Market Analysis