The economy is adding jobs, though not enough to bring down the sky-high unemployment rate. But it’s not just the quantity of jobs that’s a problem, it’s the quality, too.
As the econ team at Wells Fargo points out:
– Despite the pickup in hiring, average earnings have continued to moderate and are up just 1.9 percent over the past year.
– Real after-tax per capita income, or real take-home pay, has fallen in two of the past three months and is down modestly over the past year.
Why are incomes falling in real terms? It’s because a “a disproportionate share of the jobs that have been added over the past two years have been in relatively low-paying industries” such as in the retail, leisure, hospitality, temp and home health-care industry. Hiring in those sectors has accounted for 40.7 percent of the jobs added over the past two years. By comparison, these industries account for just 28.9 percent of the workforce. Not only is average hourly pay relatively low in these industries, but a large proportion of the jobs tend to be part-time.
And here is JPMorgan on the same topic:
The gains in employment and hours worked have been encouraging, but the data on average wages have been more downbeat. Average hourly earnings increased only 0.1% last month; over the past year wages are up 1.9%, though the trend is decelerating, as the annualized pace of pay growth over the past three months has been only 1.4%. Pay gains have not kept up with the pace of inflation, even when one strips out the volatile food and energy categories.Americans want good jobs. Americans want prosperity. Right now, they are getting neither.
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