Low Wage Sectors Drive Employment Growth

Source: Bloomberg Briefing

This morning, I mentioned how little I care about the discrete monthly NFP data each month, saying the “overall trend” was what mattered. Specifically, I suggested looking at internals of the report for trends in wages, temp help, hours worked, etc. to determine the overall health of the labor market.

This report showed a continuation of a trend I find to be unhealthy: The outside contribution of low wage sectors to the NFP report.

Leisure and hospitality, health care and social assistance, retail and temporary jobs — all low wage sectors — have been responsible for over half (51%) of the private sector job growth the last year.

Weak wage growth is function of slack in the labor force and a lack of negotiating power amongst job holders and seekers.

This piece is cross-posted from The Big Picture with permission.

3 Responses to "Low Wage Sectors Drive Employment Growth"

  1. benleet   December 10, 2012 at 5:31 pm

    BLS Nov. 2012 report, released on Dec. 7, 2012, states an average of 151,000 per month job increase in 2012, and 153,000 per month in 2011. Since 2000 the "working age" population has increased by 31.6 million, which has increased the workforce by 136,000 per month or 129,000 per month depending on the participation rate one chooses. So we are about 15,000 to 24,000 jobs per month above the normal population growth rate, meaning the employment to population ratio is barely budging, and it's at a low not seen since 1984. And now this article shows that half (51%) the jobs are low wage. PERI, the U.Mass/Amherst economics institute, also reports 2/3 of next decade's new jobs will be low wage. And wages and salaries as a percentage of total income is at its all time low, below 50% of total personal income. Total benefits as portion of total income is down to 1954 level. "Just the facts, Mam," as Jack Webb would say. OK, Sergeant Friday!