Sunday, August 4, 2013

The 162,000 jobs that the economy added in July 2013 were a disappointment

The quality of the jobs was even worse. A disproportionate number of the added jobs were part-time or low-paying — or both. Part-time work accounted for more than 65% of the positions employers added in July 2013. Low-paying retailers, restaurants and bars supplied more than half of July's job gain. So far in 2013, low-paying industries have provided 61% of the nation's job growth, even though these industries represent just 39% of overall U.S. jobs. Mid-paying industries have contributed just 22% of 2013's job gain. "The jobs that are being created are not generating much income," Steven Ricchiuto, chief economist at Mizuho Securities USA, wrote in a note to clients. That's one reason Americans' pay hasn't kept up with even historically low inflation since the Great Recession ended in June 2009. Average hourly pay fell 2 cents in July 2013 to $23.98 an hour. Part-time work has made up 77% of the job growth so far in 2013. The government defines part-time work as being less than 35 hours a week. Analysts say that some employers are offering part-time over full-time work to sidestep the new health care law's rule that they provide medical coverage for permanent workers. (The Obama administration has delayed that provision for a year.) Many employers have also discovered that they can use technology to do tasks more cheaply and efficiently than office workers used to do. And some have found that they can shift middle-class jobs to low-wage countries such as China. By contrast, most lower-paying jobs — from waiters and hotel maids to store clerks, bartenders and home health care aides — can't be automated or shipped abroad. For the most part, Daniel Alpert, managing partner of Westwood Capital, wrote in a recent report, "the only folks engaging in meaningful hiring are doing so because labor is cheap." The low quality of the added jobs could help explain something that has puzzled economists: How has the U.S. economy managed to add an average of roughly 200,000 jobs a month in 2013 even though it grew at a tepid annual rate below 2% in the first half of the year? Some are proposing an answer: Perhaps a chronically slow-growth economy can't generate many good-paying jobs — but can produce lots of part-time or lower-wage retail and restaurant work. Diane Swonk, chief economist at Mesirow Financial, recalls that the robust economic growth of the late '90s generated millions of middle-class jobs. And it pushed unemployment so low that short-staffed companies were forced to convert part-time jobs into full-time ones. "Faster growth would fix things," Swonk says. "That's the magic fairy dust."

1 comment:

Average Joe said...

http://www.parapundit.com/archives/009181.html