Small Business

Hillary and Jeb on the struggling American worker

Hillary Clinton and Jeb Bush.
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Main Street is looking ahead to the second half, and business owners aren't feeling very optimistic, according to new data. U.S. small-business confidence fell in June to its lowest level in more than a year amid forecasts of weaker profits and a softening labor market.

The June report comes a day after Democratic presidential front-runner Hillary Clinton unveiled the outlines of her economic plan. She focused on protecting workers and wages, and called out the sharing economy as a potential factor in dampened wage growth. And last week, Republican presidential candidate Jeb Bush said Americans need to work longer hours to boost economic growth.

In many ways, the focus on hours worked and wages highlight the patchwork of jobs or short-term gigs that many Americans have cobbled together since the Great Recession. And for those workers who have managed to find full-time jobs, the bulk of employment growth since the downturn has focused on lower-wage industries and positions that don't always pay the minimum wage.

Politicians are focusing on traditional Main Street issues because they're "waking up to the fact that we have had 30 years of wage stagnation," said Tom Kochan, professor at MIT Sloan School of Management. And the contract worker trend emerged before the recession and "accelerated" even after the the recession ended, Kochan added.

The reality of the new American worker is "enhanced levels" of part-time jobs that still don't have the cushion of health-care coverage or retirement benefits, said Gary Burtless, senior fellow in economic studies at the Brookings Institution.

Hillary: 'Gig' economy raises hard questions

At a speech unveiling her economic policy agenda for the first time at the New School in Manhattan, Clinton took a shot at the sharing economy, which connects freelancers with available work largely through independent contract work. The message aligns with congressional Democrats, who are pushing for a $12 minimum wage by 2020, and President Barack Obama's recent proposal to extend overtime payment to more white-collar workers.

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"This on-demand or so called gig economy is creating exciting opportunities and unleashing innovation, but it's also raising hard questions about workplace protections and what a good job will look like in the future," Clinton said.

The presidential candidate also vowed to call out companies that incorrectly categorize workers to pay them less income. "I'll crack down on bosses that exploit employees by misclassifying them as contractors, or even steal their wages," she said.

Meanwhile last week in Manchester, New Hampshire, Bush said Americans should have the chance to . "People need to work longer hours and through their productivity, gain more income for their families," he said.

And without more hours worked and higher pay, Main Street America could be less optimistic going forward. The National Federation of Independent Business optimism index fell 4.2 points to 94.1 last month, its lowest level in more than a year. Measured another way, the reading is the biggest month-over-month decline in more than 2½ years, or since November 2012.

Nine of the NFIB index's 10 components fell in June including declines in spending plans and expectations for earnings. While not a recessionary signal, the reading is "not supportive of an optimistic view of growth in the second half," according to the NFIB.

More lower-paying jobs

Meanwhile as the "gig" economy grows, even workers who have managed to secure full-time positions haven't seen their wages soar.

There are now 1.2 million fewer jobs in mid- and higher-wage industries than there were before the Great Recession, according to data from the National Employment Law Project. In contrast, there are 2.3 million more jobs in lower-wage sectors than before the recession.

Between 2009 and 2013, wages declined in many lower-wage occupations that often don't pay minimum wage including retail salespersons, cashiers, waiters, restaurant cooks and home health aides, according to NELP data.

“No matter your political leanings, the wage issue has beenwith us since 1980—we just really aren’t getting wage growth for those low-wageworkers," said Kochan of MIT.

Some cities and states, meanwhile, have moved to independently lift the minimum wage above the current federal level of $7.25 an hour.

"As we approach the election and more states and cities have acted ontheir own, politicians realize they have to do something about it,” Kochan said.