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The poor get poorer: Low-wage jobs still dominate

Not so long ago, Russ Holton was married, making a six-figure income and looking at a promising career ahead.

Now, seven years later, he's divorced, interviewing for $12-an-hour jobs and trying to further his education and stay afloat in a jobs market that is creating in excess of 200,000 positions a month but few that provide an opportunity to live the life to which he had become accustomed.

"I'm not finding what I'm looking for," Holton, a 45-year-old resident of Mason, Ohio, said during a phone interview that provided a break during a day of job hunting. "I just interviewed for a job that pays $12 an hour. I felt really stupid. For 12 bucks an hour, that's not right.... It's a different world right now."

While it may be a different world, it's a familiar story.

Each month the Bureau of Labor Statistics reports the number of new nonfarm payroll positions created, and for the past year the average has been 209,000. That's not a spectacular number, but it is at least in line with historical trends and has contributed to bringing down the unemployment rate from 7.3 percent to 6.2 percent during the period.

Behind those numbers, though, has been a disconcerting brew of statistics—aside from the much-cited decline in labor force participation—that shows the jobs market is far from full health. Part-time jobs continue to grow almost as quickly as full-time positions, the average duration of unemployment is still about eight months and, perhaps most disturbingly, post-recession job creation remains skewed toward lower-wage positions.

A waitress prepares a patron's bill at the Bar Louie restaurant located in the River North neighborhood of Chicago.
Tim Boyle | Bloomberg | Getty Images
A waitress prepares a patron's bill at the Bar Louie restaurant located in the River North neighborhood of Chicago.

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Over the past year, lower-wage industries such as retail, wait staff and home health aides accounted for 41 percent of the positions created, according to the latest figures from the National Employment Law Project, an advocacy organization that has been pushing for more aggressive jobs legislation in Congress and an increase in the national minimum wage.

In contrast, medium-wage positions such as manufacturing and textiles, accounted for 26 percent of the new jobs, while higher-wage positions in white-collar industries generated 33 percent of the new jobs.

Overall, since the recession lower-wage jobs have grown by 2.3 million while medium- and higher-wage jobs actually contracted by 1.2 million, the NELP said, while noting that the trend has begun to swing somewhat in recent months towards better-paying jobs. The numbers fit with the anemic 2 percent annualized wage growth the job market is seeing.

"It's promising to see, the last six months, how job growth in higher-wage industries is kind of on par with the job growth in lower-wage industries," said Claire McKenna of the NELP. "But it's really hard to tell whether or not it will continue. There are a lot of other indicators that suggest there's still a lot of labor market slack."

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Holton is working on an education at the Warren County Career Center in Lebanon, Ohio, where he expects to receive certification in February to set up computer networks and perform troubleshooting. His previous high-paying gig—he and his then-wife were pulling down $250,000 annually, he said—also was in information technology, as a salesman until the recession hit, his company got bought out and the new owners were not enamored of his high paycheck.

That has left him groping to reinvent himself and hoping to get back to a better-paying position.

"I'm pessimistic over the short term, optimistic over the long term," Holton said. "I'm looking at the jobs that will be available come February when I have the next certification—they're hiring at $90,000. I probably won't stay here. I'll have to move."

Lettice Brown never thought location would be a problem for her.

As a resident of a Washington, D.C., suburb, she figured that when she got downsized from her contract position at the U.S. Census Bureau in September 2013 that finding another position wouldn't be that difficult. She was wrong.

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Unemployment lasted nine months and only ended when Brown took a full-time, commission-only job selling office supplies that she supplemented with a second position making $9.25 an hour working part-time at a Home Depot. In doing so, she joined seven million Americans working two jobs, a number that has stayed constant since the recession.

"It was pretty rough going through the holidays, not having much," the 30-year-old resident of Fort Washington, Maryland, said.

Recently, though, things have gotten a bit better.

She has actually taken a job in her profession, as a geographic information systems analyst with the Michael Baker Corp. But it's not guaranteed, and Brown is worried that she could either lose the position after her contractor period expires or get put on full-time at a lower salary.

Ask her what she thinks when she hears the government touting a lowered unemployment rate, and her response is fairly typical of someone who has struggled through a difficult job market.

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"I kind of blow it off," she said of the monthly payroll news. "Unemployment in the entire country may be coming down, but it doesn't say much for this area. D.C. is very high for unemployment. I know so many people who are unemployed, even now. I thought it would be the other way around."

Indeed, even with the seeming improvements at least in the quantity of job creation, the unemployment rate in Washington, D.C. remains stubbornly high at 7.4 percent, down 1 percentage point from a year ago. Only five states have a higher rate.

"When I hear those figures (about national job growth), I don't know where they're looking or getting their facts from," Brown said. "It's progress for them, maybe, but it doesn't mean much to me."

—By CNBC's Jeff Cox.

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