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.

Category: Data Analysis, Employment, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Low Wage Sectors Drive Employment Growth”

  1. capitalistic says:

    Thanks for mentioning this. I’ve always said that the published unemployment rate is sanitized and stationary. The actual figures we should pay attention to are the number of contract employees, part-timers and the underemployed (which is the biggest problem in a our economy).

    There have been an increase in the number of over-qualified people working at Starbucks, Target and restaurants…

  2. Jojo says:

    I’ve long thought that the government needs to also report on job QUALITY, not just QUANTITY.

    As it stands now, part-time jobs are as good as full-time jobs to the government, MSM and Wall Street. But we all know that a burger flipper job is not equivalent to a say, engineering job in real life.

  3. Francois says:

    Gee! That ought to be entirely due to these evil unions…right? :roll eyes:

    Got to wonder how long will we accept this phenomenon to continue. How can these workers provide opportunities for their progeny? They can’t follow Rmoney’s advice of “borrow from your parents and start a business!” They are the poor parents!

    Moreover, ow healthy, and for how long, can an advanced economy remain if wages consistently lag behind costs of living?

    Just as a small example from my field: When I read some market analysts stating with all the ignorant bliss of the clueless that a sector like health care will keep providing a bounty of good jobs, I always ask: “With such lopsided wage distribution, where will the health care customers come from?” Don’t these guys even know that the number of office visits to physicians have been STAGNANT since 2005? That “reasonable estimates of health care waste show that half or more of all current health care expenditures, or currently about $1.5 trillion each year, provide no value“.

    No one has been able to provide a cogent answer yet…and I’m not holding my breath for one!

    In the meantime, the 0.01% keeps on repeating the mistakes of the past.

    As a nation, we’re not doing well…not by a long shot.

  4. S Brennan says:

    Jojo,

    This is a difference for now:

    “we all know that a burger flipper job is not equivalent to a say, engineering job in real life”

    …but our plutocrats are dong their level best to make the wage distinction between between burger flippers and engineers disappear…along with engineering jobs for US born citizens:

    http://www.economicpopulist.org/content/congress-betrays-us-stem-worker-once-again

  5. 4whatitsworth says:

    It’s an interesting thought and I agree in the short run that it is not necessarily good for the overall economy. In the long run however work of any kind is much better than people sitting around. If people apply themselves they will learn skills that they can use. Example: If there are a lot of low paid workers they will need managers and good managers are in very short supply in the US.

    I suspect that you guys are going to hate this statement and pick it appart but generationally wealthy aside many of the top 2% that everyone loves to hate worked very hard and for minimum wage at one time in their life. I worked a few summers @$3.25/Hr doing landscape maintenance and eventually decided that I brought more to the table than I was being compensated for and what my boss did (taking calls and scheduling work) I could do so I did put in an classified ad in the newspaper and suddenly I was in the money more work than I knew what to do with at $8/hr. I suppose I could have stirred up the other workers in my crew but I did not see a benefit to that and had I chosen that path I suspect my life would be completely different.

  6. S Brennan says:

    4whatitsworth,

    To: “the top 2%…worked very hard and for minimum wage at one time”

    So did everybody else…FYI, it’s called growing up.

    But let’s look at your claim on it’s face, the minimum wage of 40 years ago would be over 20.00 buck s today. So you fall down on that conjecture, you paid far more than you are willing to pay others.

    You think starting a lawn-care business today is just takes some pluck? Think again, a quick CraigsList check on “lawn-care” and turned up 1296 ads since the 1st of Dec. Calling one* at random got a 10/hr bid using his equipment…he sounded pretty desperate. 8.00/hr thirty five years ago would be approximately $31.17/hr today…a laughable rate if you were ballsy enough to ask for it today.

    FYI, [and I know this for a fact] Home Depot pick up workers are to be found for 12.00/USD…that’s hard labor at 3.00 more than I made in 1976 for doing the same work, inflation calculator says that should be 35.07 in 2011

    The opportunities I had are gone. Unlike today’s commenter, I know telling kids to follow my path is cruel pablum. 4whatitsworth, in order to get a grasp of today’s reality maybe you should try volunteering at a food kitchen. At the food bank you will get a chance to meet people, who through no fault of their own, are living in shelters, cars, or if they are lucky, 2-3 families in one apartment, all the while begging for food about to rot. Six years ago they were, happy, hardworking, taxpaying citizens. Tell those folks to start a lawn-care business…I’ll stand aside while they give you their reply, it should be a show.

    At least during the depression, the good people knew they were lucky to be working, the phrase of the time; “but for the grace of God go I”.

    *Because he was clearly desperate, I felt like an ass, I’ve got him coming over Saturday for two hours of weeding work…if he does a half decent job, he’ll get 50% more.

  7. dougc says:

    Since 2009, 4 million job have been created for people aged 54 to 69 and 3 million jobs have been lost for the rest. Older workers are willing to take parttime, temporary or seasonal work. In addition many are on medicare and are cheaper to employ.

  8. ashpelham2 says:

    You all are talking about this job conundrum like it’s a mystery as to what and why it’s happening. I’ll give you 1 great reason why the job market can’t get off the floor: Barrack Obama.

    Business owners and those of wealth who would make decisions to grow their businesses that they own, are scared to death of what the future holds. They see a leadership trend that has “trickled down” to the general public, of class warfare waged by that side of the American public. They feel that hiring people will just bring on more difficulty to their already teetering financial position. They are looking for places to hide their wealth, and they are looking to get out of their businesses and industries with their equity intact. Hiring and expansion is the last thing on their minds.

    Oh sure, the fast food joints and hotels are always looking for low wage employees. Even Wal Mart will hire you probably, if you go looking for it. But jobs at the mall are strained, due to the effect of Amazon and online shopping. So, add in a hostile business environment that nationally rivals the environment for business in California, and add in a healthy dose of technology reducing the need for humans in nearly every industry, and wa-la, a recipe for high unemployment.

    The biggest disappointment of all? That these things continue to go on, and yet the unemployment is “officially” still dropping. 2.3% in 2.5 years, but still falling…

  9. 873450 says:

    Jojo Says:
    “I’ve long thought that the government needs to also report on job QUALITY, not just QUANTITY.”

    We need to change metrics.

    With 93% of new income growth landing in the pocket of 1% since the great recession “officially” ended late 2009, it doesn’t take a tremendous leap to surmise positive GDP in the USA no longer reflects a healthy economy benefiting society at large. The unprecedented prosperity enjoyed by a tiny sliver of the population while living standards decline, or at best remain stagnant, for the overwhelming majority of U.S. citizens is transforming our country into a feudalistic society that more resembles modern day Saudi Arabia than 17th century France. American brand democracy and capitalism are joined hand-in-hand together failing miserably.

    We need to change metrics.

  10. DeDude says:

    I agree with the general idea that we should care both about the number of jobs added and compensation. Though from the consumption and GDP perspective pretty much any employment gives a consumption boast relative to no employment (otherwise people pass on the job and let someone else take it). But I am puzzled that you would call health care and social assistance a low wage sector. I doubt the average compensation in that sector really is below the average compensation for all employment.

  11. 4whatitsworth says:

    @ ashpelham2, that is my view as well. What business person in their right mind is going to take the biggest risk a business person takes which is staffing at a time of such uncertainty. Of course companies are hording cash no one knows when this B.S. and class warfare thing is going to end. We might be rich but were not stupid.

    @ S Brennan “it’s called growing up” your right the problem is some people never grew up they blame others for their problems unfortunataly we have a president that is doing exactly that. Oh and the hire wages and class warfare thing has already played out go visit downtown Detroit this is what class warfare looks like when its all over. Also to your point “The opportunities I had are gone” I sure hope you don’t have to much influence on young people because this is simply not true there are plenty of low cost business to start look at the explosion in the smart phone sales it takes nothing but time and effort and a little knolwedge to write a smart phone app also there is going to be a whole bunch of old people soon that can use help.

    Here is what I say to young people.. Take a look at this graph of wages vs corporate profit http://static4.businessinsider.com/image/50b7d86beab8eab303000011-612-459/image.jpg now yes corporations are making way to much money but this represents a great opportunity for you because they are overcharging their customers and underpaying their people. Grow up, stop wining, and get out there and compete! If you are not a hard nose competitor then use the greatest wealth transfer vehicle ever created marriage but get out there!

  12. Jojo says:

    @ashpelham2 said “You all are talking about this job conundrum like it’s a mystery as to what and why it’s happening. I’ll give you 1 great reason why the job market can’t get off the floor: Barrack Obama.”
    ———-
    Sigh. Wake up and smell the coffee, as the old saying goes. One might ask how many jobs were created during GWB’s 8 years and the answer would be a pretty poor 3 million or so. See:
    =========
    WSJ
    January 9, 2009
    Bush On Jobs: The Worst Track Record On Record
    http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/
    =========

    If you think business owners are scared to death, imagine how scared the business workers are, given that they have to work for owners who are constantly looking to cut costs, don’t seem to give much concern for service perception or metrics, force people into part-time hours so they don’t have to pay benefits, whine constantly about lack of skilled workers but refuse to invest in training unskilled workers or if they do find skilled workers, refuse to pay them decently. And so on.

    I am amazed that USA workers haven’t yet started a workers revolution by lynching a few of these uncompassionate, stingy, constantly whining business owners!

  13. DeDude says:

    There seem to be the same kind of misunderstanding of “job creation” here as there is about “savings” in the talks on capital hill. The ONLY people who can actually CREATE jobs are consumer class people, and they do so by increasing demand. If that demand is increased because they have higher income, then that demand increase (and the jobs) are sustainable. If it is done by increasing their debt then the whole thing will collapse (like under Bush 2). If demand is constant and business A manage to expand its market share and hire 10 people then business B who lost that market share will fire 10 people because they lost the same work that was gained by their competitor. So business A may have been successful by certain measures but it did not CREATE jobs, it shifted jobs. That kind of out-competing other businesses for consumer dollars may be personally rewarding for the business owner but it does nothing to grow the economy or jobs.

    Same type of misunderstanding is at display when GOP want to “save” money by cutting people off from Medicare. It is not SAVING it is cost shifting. People will need medical care at age 65-67, but the cost will come directly out of their own pockets rather than through medicare taxes.

  14. 4whatitsworth says:

    @DeDude, its good thing that Steve Job’s did not know this. Otherwise we might not have easy to use PC’s and the iPhone.

    @Jojo, Bush was not much better and even worse in many ways but leadership does matter. So here we are 12 years into poor leadership of the US.

  15. Jojo says:

    # 4whatitsworth said “@Jojo, Bush was not much better and even worse in many ways but leadership does matter. So here we are 12 years into poor leadership of the US.”
    ——–
    Agreed. I didn’t vote for Obama this time around because he is an abject failure. But the Republicans didn’t offer me a viable candidate to vote for either. So I protest voted for Roseanne Barr. Which of course did nothing much.

  16. 4whatitsworth says:

    Hey Jojo, go Rosanne!-) Here is one for you typically I am on the road all 4th quarter closing business the latest trip I typically take is November. So far this week (Dec 10) is the only one I am willing to get on a plane for. I sure hope someone can make a decision next year! Oddly I could see Rosanne cornering Boehener and saying come one lets do this!

  17. DeDude says:

    I am sure that Steve Jobs understood that he was not being a “job-creator” when he took market share from the PC or moved his production to China. He was worried about getting bigger market shares and profits in whatever way he could – screw who ever he had to. Yes that process can sometimes, as a side-effect, produce better products at lower prices. But it doesn’t happen all the time. In the case of Apple and many other companies the patent protection law has allowed them to get monopolies that they use to charge more than twice of what would be a fair price, thereby sucking up demand (consumer dollars) and killing jobs.