Dr. Susmit Kumar, Ph.D.

Recently in India, some economists have argued that as India has been experiencing nearly 7% GDP growth rate, there has to be corresponding job growth also. As per these economists, proper surveys are needed to find the jobs being created due to 7% GDP growth rate. In the last couple of years, in places like Noida in NCR (National Capital Region), rents have gone down drastically which shows that good-paying jobs are not being created.

Now the question is – What are these newly created jobs which present surveys cannot capture?

As explained in my articles at my website (www.susmitkumar.net), India, having US-educated economists in top economic posts, has been following in the footsteps of the US economic policy. Hence let us study the jobs created in the US, after the 2008 Great Recession, which should give us an idea about finding the elusive newly created jobs in India.

As The New York Times reported (Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones, Annie Lowrey, The New York Times, April 27, 2014), based on a study, the deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery in the US has been in low-wage work, at places like strip malls and fast-food restaurants (in India that would be in kirana stores and dhabas). Job losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million. There was a drastic reduction in mid-wage jobs also. As per the same study (Tracking the Low-wage Recovery: Industry Employment & Wages, National Employment Law Project, April 27, 2014),

·         Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.

·         Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.

·         Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.


(Source: Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones, Annie Lowrey, The New York Times, April 27, 2014)


In the US, Wall Street forces firms to show profit every quarter. Hence CEOs have to come up ways to reduce expenditure and increase income. They squeeze as much money from the firm (like keeping it lean and thin, i.e. having as few employees as possible) as possible for the shareholders. They lay off employees even if the firm has profit year after year. In worst case, they just shut down the firm and imports from overseas, mainly China, as they can make more money by manufacturing overseas. For this very reason due to being excessively dependent on the US educated economists, the country has been experiencing jobless growth after the NDA2 has taken over the reins in 2014, similar to "Jobless Recovery" in US since the 2008 Great Recession. This is not good for a nation’s economy. A country is not a firm. For the development of a country, you need to keep the entire population in mind rather than few like shareholders in case of a firm.

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