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... And, like many formerly jobless people who find work these days, Becker is now paid far less than before — $25,000 less.
It's one of the bleak realities of the economic recovery: Even as more employers are starting to hire, the new jobs typically pay less than the ones that were lost.
In the government's data, a job is a job. More jobs point to a growing economy. But to people who used to earn $60,000, a new $40,000 job means they'll spend less — and contribute less to the recovery.
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Worse for those affected, people hired at lower wages in a tight job market tend to lag behind their peers for years, sometimes decades. For example, workers laid off during the 1981-82 recession earned 20 percent less than people who remained in a job — even 20 years after they were rehired, a Columbia University study found. The study examined pay for white- and blue-collar workers, managers and hourly workers.
That means a few short months of unemployment could haunt workers such as 34-year-old Jessica Moore for years.
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John Irons, research and policy director for the Economic Policy Institute in Washington, says that as millions of unemployed workers accept lower pay for new jobs, their collective wage cuts will likely stifle income growth for years.
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The resulting wage depression is part of the economic "scarring" of the labor force, Irons said. For example, inflation-adjusted wages stagnated for four years after the downturn of 1991. And they remained mostly flat from 2002 to 2005, after the mild recession of 2001, according to Labor Department data.
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Consumers already are saving more and spending less than they normally do, because of high debt and tight credit. With Becker and other newly hired workers keeping tight grips on their wallets, consumer spending could stay weak well into the recovery, sapping its strength. How much will hinge on how long and how deeply wage growth lags.
Pay tends to stagnate during or immediately after recessions — and it's often severe during "jobless recoveries," when hiring remains weak long after the economy starts growing again, according to a 2005 study by Princeton University economist Henry Farber.
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For example, workers who lost jobs and found new ones from 1981 to 1983 took average pay cuts of 10.8 percent once they found new jobs, the study found. But from 1983 to 1985, as hiring accelerated, that pay cut narrowed to less than 8 percent.
But those who lost jobs and were rehired from 2001 to 2003 averaged bigger pay cuts of 13.6 percent as hiring stagnated for nearly two years during a jobless recovery.
By contrast, formerly unemployed people who were rehired during the boom years of the late 1990s averaged a minuscule pay cut of 0.2 percent, according to the study, which examined pay data from the Labor Department. ...
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