By Melinda Hill
July 12, 2004

Detroit Mayor Kwame M. Kilpatrick, Chair of the Council for the New American City, released the Metro Economies Report, -Types of Jobs Lost and Gained 2000-2006,- on June 28, during the plenary session of the 72nd Annual Meeting of the United States Conference of Mayors.

The report calculates an average wage gap of 12 percent between jobs lost from 2000 to 2003 and jobs created from 2004 to 2006, as well as a 14.5 percent -Health Benefits Gap,- forecasting that 14.5 percent fewer new job recipients will have health care coverage compared to those who lost their jobs between 2000 and 2003.

"The report indicates that the economy is not yet producing enough good-paying jobs to replace those that were lost during the recession. This is an issue that our national leaders must begin to address," Kilpatrick said. Prepared by the economic forecasting firm Global Insight, the report is an in-depth analysis of the changes, growth, and overall trends currently dominating the nation's economy and documents the employment changes in 318 metros, as well as forecasts future growth in these metro areas.

According to the report, despite recent job growth and sharp improvements in the nation's employment situation, a significant structural change in the economy is resulting in lower wages and fewer benefits for many Americans. In fact, although the report forecasts that all new jobs created between 2004 and 2006 will have an average wage of 12 percent less than jobs lost between 2000 and 2003, an even greater wage gap of 15 percent emerges when the sectors hit hardest by the recession are compared to the sectors that will be responsible for the most job gains during the 2004-2006 period.

The report also calculates, for the first time, a -Health Benefits Gap- of 14.5 percent. This indicates a health insurance dilemma that is compounded by the fact that employee participation in employer'sponsored health insurance programs in the private sector has dropped from 66 percent in 1990 to 45 percent in 2003 for all workers. This dramatic drop can be traced in part to the fact that between 1993 and 2003, full time workers required to make premium payments to medical plans increased by 24 percent (from 54 percent to 78 percent) for a single coverage plan and 16 percent (from 74 percent to 90 percent) for those with family plans.

The change responsible for these gaps refers to the types of jobs lost during the recession compared to the types of jobs currently being created. Particularly striking is the loss of high paying jobs with good benefits, such as manufacturing. Unfortunately, though these jobs are being replaced, they are being replaced by jobs that will be clustered predominantly in the service sector, which usually boasts lower salaries and fewer benefits.

Though the wage and insurance gaps are troubling, the economy has begun to add jobs at a rapid rate and the report predicts that the payrolls in the nation's 318 metro areas should begin growing by close to 2 percent on an annualized basis by the end of 2004. From December 2003 to April 2004, 229 metros saw job gains, with 14 gaining more than 10,000 jobs and an additional 19 metros adding 5,000 jobs. All but nine of the 33 top job gainers were in the southern and western states and the report indicates that metros located in these areas will continue to lead the top 20 metros in job growth.

The report shows that although the economy is experiencing rapid job growth, improvement in the top 20 metros will be led by improvements in the professional and business services sector and sectors such as manufacturing will not see any immediate relief. Thus, because new jobs will be concentrated in these lower paying sectors, which tend to offer fewer benefits, the 12 percent wage gap and 14.5 percent health insurance gap will continue to be problematic. Kilpatrick pledged that the Council would continue to develop policy recommendations to address these gaps.