(What’s Left of) Our Economy: New Evidence of a Crossroads for the U.S. Jobs Market

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benefits, compensation, Employment Cost Index, Federal Reserve, inflation, Labor Department, labor market, labor unions, private sector, recovery, salaries, wages, {What's Left of) Our Economy

If you’re one of the American workers who’s been happy with the current economic recovery, you might have already seen peak pay gains. If you haven’t been satisfied, get ready for greater disappointment. And whatever category you fall into, you’d better hope that new U.S. government data on overall compensation paid by American employers is just a blip. Ditto that for the Federal Reserve, which is set to announce its latest decision on interest rates later today, and which seems convinced that the American labor market is healthy enough to withstand a series of hikes back toward historically normal levels.

Last week, the Labor Department issued its latest quarterly report on how much business shells out in terms of both wages, salaries, and benefits. The results in the main release looked pretty good, but they’re not adjusted for inflation – which means that they don’t tell the full story about whether or not compensation is keeping up with the cost of living. Luckily, Labor released the inflation-adjusted figures, too, and they make clear that whatever real compensation progress workers might have been recently been making could be in danger.

According to these constant-dollar Employment Cost Index (ECI) figures, real pay for all private sector workers was flat year-on-year for the quarter ending in March. (I don’t usually examine pay data that include government workers because their compensation is set overwhelmingly by political decisions, not market forces, and therefore don’t say much about the underlying strength of the labor market or the broader economy.)

That annual result was the worst since the quarter ending in June, 2014 – when after-inflation compensation also flatlined on an annual basis. By comparison, the real ECI between that first quarter of 2015 and the first quarter of 2016 rose by 0.97 percent.

Looked at quarter-to-quarter, the real ECI for private sector workers fell by 0.10 percent. The previous sequential change was a 0.29 percent improvement. Indeed, the latest numbers broke a two-quarter string of gains.

From a longer-range perspective, however, the current recovery still stacks up pretty well for private sector workers (although the data only go back to mid-2001). Since it began, in mid-2009, their total compensation is up by 3.60 percent. During the previous (shorter) expansion – which ran from late 2001 through late 2007, total inflation-adjusted compensation rose by only 2.36 percent.

The new real ECI results reveal similar trends for American manufacturing workers. The first quarter’s year-on-year 0.20 percent drop was the worst such result since an identical decrease in the final quarter of 2012. And the previous first quarter annual change was a 1.49 percent rise.

Sequentially, real manufacturing compensation also fell during the first quarter – by 0.29 percent. And as with overall private sector compensation, that was the first such decline in three quarters.

Interestingly, in terms of real total compensation, the current recovery has been a winner for manufacturing workers to an even greater extent than for all private sector workers. Combined constant dollar employer costs for wages, salaries, and benefits have risen by 4.72 percent – compared with a 1.99 percent advance during the previous recovery. (RealityChek regulars will note that these results contrast strikingly with those for wages alone, where manufacturing has been a major laggard. One reason is surely manufacturing’s relatively high unionization rate – which typically results in better benefits won and kept.)

If the Federal Reserve decides today to raise the federal funds rate it controls directly, or even if it simply stays determined to remains on a tightening path, it would signal its confidence that the American labor market remains on the mend following devastating losses during the last recession. Any doubts the central bank voices about its current strategy might indicate that it’s genuinely worried about the new ECI statistics – and that U.S. workers should be, too.

(What’s Left of) Our Economy: New Data Showing the Labor Market Still Needs Some (Positive) JOLTS

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Jobs, JOLTS, Labor Department, labor market, Obama, recession, recovery, Trump, turnover, {What's Left of) Our Economy

Although today’s government statistics on turnover among American workers lag reality by two months, they’re still worth looking at because they fill in more crucial details about the state of the U.S. employment scene as the Obama years draw to a close, and how it’s changed. And the main message sent by these so-called JOLTS numbers? Despite some very recent improvement, the country’s job market still features historically high levels of (a) private sector jobs and job openings that shouldn’t really be described as private sector, and (b) jobs in low-wage parts of the economy.

According to these new figures from Labor Department, American employers said their companies had openings for 5.522 million workers in November. (These numbers are still preliminary.) Of these, fully 20.28 percent could be found in what I call the economy’s subsidized private sector – industries where levels of activity, and therefore employment, depend heavily on government funding. (Health-care services is the leading example.) Openings in the “real” private sector – where activity is driven largely by market forces, and therefore more accurately reflects the economy’s underlying strengths or weaknesses, amounted to 69.76 percent of the total.

These results are better than those for November, 2015. A statistical year ago, that subsidized private sector comprised 21.41 percent of 5.198 million total reported job openings. And only 69.49 percent of such opportunities were reported for the real private sector. Moreover, these improvements have slowly been emerging over the last year.

The nation has also seen progress on this front going back to the start of the current economic recovery, in mid-2009. That June, subsidized private sector job openings stood at 22.28 percent of all reported openings, and their real private sector counterparts came in at just 64.25 percent.

Yet it’s also clear that the American job market hasn’t returned to normal levels – at least if “normal” is defined as its state on the eve of the Great Recession, at the end of 2007. Back then, the subsidized private sector generated only 18.31 percent of all reported job openings, and the real private sector’s share was 71.74 percent.

Somewhat more discouraging trends can be seen in the economy’s low-wage sectors – notably retail; leisure and hospitality; and the poorly paying portions of the overall high-wage professional and business services sector. (My figures for the latter are extrapolations based on their share of actual professional and business services employment, because they’re not explicitly reported in the JOLTS statistics.)

Job openings in these low-wage industries represented 32.58 percent of all openings in November, the Labor Department reported this morning. As with subsidized private sector openings, this share has been slowly trending down in recent months, and certainly from November, 2015 levels (33.49 percent).

But when the current economic recovery began, in mid-2009, the low-wage sectors produced only 28.38 percent of all job openings. And when the last recession began, in late 2007, their share was 31.94 percent – still smaller the most recent results.

It’s now more than seven years since this recovery began. Will a President Trump be able to give it the jolt it needs and that so many American voters clearly want? Keep watching the JOLTS reports for valuable insights into the emerging answer.

(What’s Left of) Our Economy: Real Wage Trends Seem to Clash with the Fed’s Rate Hike Decision

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ECI, Employment Cost Index, Federal Reserve, inflation-adjusted wages, interest rates, Janet Yellen, labor market, real wages, recovery, wages, {What's Left of) Our Economy

As I’m sure most of you know, the Federal Reserve this week decided to raise the short-term interest rate it controls directly by a quarter of a percentage point – to a range of between 0.50 percent to 0.75 percent. (This “Fed funds rate” is officially a target and is always expressed as a range.) And since the Fed funds rate can strongly influence borrowing costs throughout the economy, the hike – all else equal – is likeliest to slow growth in the short run at least. It’s the price that the central bank thinks the nation needs to pay to ward off inflation, and start returning rates to the historically normal levels widely thought to be essential for long-term economic health.

This key Fed decision (only the second rate hike in more than nine years), still leaves the funds rate near all-time lows. I won’t comment here on the wisdom of this move. But the timing makes me wonder if the central bankers had seen the latest American inflation-adjusted wage figures. For although Chair Janet Yellen has made clear her belief that the U.S. labor market keeps improving enough to warrant such tightening, the new real wage numbers look like they’re sending the opposite message.

Let’s start with the after-inflation wage figures that came out on Thursday. They showed that these wages in the private sector fell in November by 0.37 percent over October levels. That’s the worst monthly performance since the 0.39 percent decrease in February, 2013. Moreover, in October, real wages inched up by only 0.09 percent. Is the wheel turning? (The wage figures don’t include government workers because their compensation is set largely by politicians’ decisions, not market forces. Therefore, they reveal little about the underlying state of the economy.)

The year-on-year results don’t provide much encouragement, either. These wages’ 0.75 percent growth was the most sluggish since the 0.29 percent annual improvement in October, 2014. Between the previous Novembers, real wages advanced by 1.92 percent.

As a result, real wages since the current recovery began in mid-2009 are up only 3.59 percent. That’s over a more than seven-year stretch!

The picture if anything looks worse in manufacturing. There, November inflation-adjusted wages sank by 0.73 percent on month – the biggest decrease since the 0.76 percent falloff in August, 2012. In October, these wages increased by 0.28 percent on month.

The annual November data? Real manufacturing wages rose by just 0.93 percent year-on-year. That’s the slowest pace since the 0.38 percent in December, 2014. From November, 2014 to November, 2015, price-adjusted manufacturing wages increased by 1.90 percent.

And since the current recovery began, constant dollar manufacturing wages have risen only by 0.84 percent. That’s almost a rounding error.

Many economy bulls insist that the wage figures aren’t all that helpful, because they leave out non-wage benefits like health insurance coverage. The government keeps overall compensation data, too. But in inflation-adjusted form, they come out on a slightly less timely basis than the wage figures. All the same, we have them through the third quarter of this year, and they’re somewhat better – though not game changers.

Between the second quarter and third quarters, the Employment Cost Index (ECI) that captures these trends increased by 0.29 percent in real terms for the private sector. That’s a distinct improvement ove the 0.48 percent sequential decrease in the second quarter, but hardly torrid, since we’re talking about a three-month period.

Indeed, in the third quarter, the after-inflation ECI was up only 0.78 percent year-on-year – much less than the 1.89 percent rise the year before.

A little more impressive is the real ECI over the longer-term. During the current recovery, it’s increased by 3.40 percent after inflation. That’s better than the 2.36 percent increase during the previous recovery. But don’t forget – that expansion only last six years (from the end of 2001 to the end of 2007).

Better yet are the manufacturing ECI numbers. The last quarterly increase was also 0.29 percent – and it followed a second quarter drop almost identical to the private sector’s (0.49 percent). But year-on-year, the real manufacturing ECI was up faster than the overall private sector ECI (0.89 percent), though that, too, represented a big dropoff from the previous annual increase of 2.33 percent.

The real manufacturing ECI is also up a good deal more during this recovery than the overall private sector ECI – 4.72 percent. And that’s a nice improvement over the previous recovery’s 1.99 percent, even considering their different durations.

Chair Yellen and her Fed colleagues keep insisting that their interest rate decisions have depended on how the latest economic statistics have been looking. Which tells me that, last week, the central bankers must have been looking at data other than the real wage and compensation figures.

(What’s Left of) Our Economy: Away from Election Spotlight, Troubling Jobs Market Signs

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Federal Reserve, interest rates, Jobs, JOLTS, labor market, subsidized private sector, wages, {What's Left of) Our Economy

The failure of Wednesday’s monthly Labor Department reading on job turnover (for August) to attract much attention amid presidential campaign scandals is as understandable as it’s unfortunate. For this last set of “JOLTS” numbers that we’ll get before election day continues showing levels of openings in low-wage sectors hovering near recent highs recorded during this recovery. And the more generally humdrum nature of the findings – total openings fell sequentially to an eight-month low of 5.443 million – could cast a little more doubt over the chances of the Federal Reserve viewing the economy and labor market as strong enough to justify another interest rate hike.

These low-wage portions of the economy consist of the retail sector, leisure and hospitality industries, and the big low-wage administrative and support services sub-sector of the larger and higher wage professional and business services category.

Add up the August openings in these industries and you come up with 32.98 percent of the total (which is still preliminary). That’s not a record for this troubled recovery – but it’s close. Further, it’s higher than July’s final 32.36 percent, which itself was revised up from 32.17 percent.

For some perspective, recall that when the Great Recession officially began, at the end of 2007, low-wage job openings made up 31.94 percent of total openings. At the recovery’s outset, in June, 2009, their share fell to 28.38 percent. So during the current expansion, this number is up more than four and a half percentage points.

The JOLTS data – which are widely thought to be especially closely followed by Fed chair Janet Yellen – also shed light on the prominence of the subsidized private sector in the recovery’s jobs landscape. These are parts of the economy that are placed into the private sector category by the statisticians, but that depend heavily on government spending for their activity levels and therefore the vigor of their hiring. Healthcare services are the leading example.

In August, they accounted for 15.75 percent of all the nation’s non-farm jobs. (The Labor Department’s American employment universe.) But that month, they generated 19.20 percent of all job openings – a finding consistent with their lead role in actual employment growth during the recovery. As a result, rather than accounting for nearly 91 percent of these employment opportunities in August, the “real” private sector produced only about 71.50 percent.

When the Great Recession began at the end of 2007, subsidized private sector openings made up 17.65 percent of the total. When the recovery began in mid-2009, the figure was 22.28 percent – since at that point the national employment picture remained so bleak that the subsidized private sector was virtually the only sector showing any signs of life. And even today, the figure is two and a half percentage points higher than before the last downturn.

Needless to say, since employment issues themselves have barely been discussed in the general election campaign, it’s inconceivable that these JOLTS trends would be brought up. And needless to say, that’s a great way to ensure that the national jobs market becomes ever more dominated by depressingly unproductive industries like healthcare and by menial service positions.

(What’s Left of) Our Economy: No Inflation Take-off in Wages – or Even Close

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inflation, Labor Department, labor market, manufacturing, private sector, real wages, recovery, wages, workers, {What's Left of) Our Economy

More evidence appeared today that, if it’s true that inflation is starting to pick up (after years of deep slumber), America’s workers don’t deserve any blame. The Labor Department today released its latest data (for June) on overall price increases in the economy, and for price-adjusted wage increases. They and the department’s databases reveal that the workforce on the whole is barely, at best, keeping up with the cost of living.

According to the Labor Department, core inflation (i.e., prices with food and energy costs omitted, since they’re exceptionally volatile) rose 2.26 percent between June, 2015 and last month. How did inflation-adjusted wages do for the private sector? They rose only by 1.52 percent. (The Labor Department doesn’t include government workers’ wages in these statistics, since they’re determined by politicians’ decisions, not by the fundamental state of the economy.)

Workers did a little better between the previous Junes. Core inflation increased by 1.76 percent, and their price-adjusted wages improved by 1.84 percent.

But between June, 2013 and June, 2014, the story was substantially different. While core prices were increasing by 1.96 percent, real wages weren’t increasing at all. That is, they were completely flat.

Strengthening the case that real wage growth is anything but strong: June private sector wages saw a sequential drop of 0.19 percent, and have fallen for two of the last three months. As a result, hourly private sector pay is now down since March. And since the economic recovery began, in June, 2009, real private sector wages have risen only 3.49 percent.

The story in manufacturing, which historically has generated most of the economy’s best-paying jobs, is somewhat better over the short-run and somewhat worse over the long run.

Even though real manufacturing wages decreased on month in June (by 0.46 percent, much more than overall private sector pay) they rose 2.37 percent year-on-year – considerably faster than the private sector pace. Indeed, through May, after-inflation manufacturing wages had grown sequentially for eleven straight months.

June’s yearly manufacturing real wage hike was also more than twice as great as that between the previous two Junes – just 0.86 percent. But during the twelve months before, real manufacturing wages actually decreased – by 0.19 percent.

Longer-term, moreover, manufacturing remains a decided real wage laggard. Since the recovery’s June, 2009 onset, inflation-adjusted hourly pay has improved by only 0.93 percent.

Economists worry about wage inflation – and the tight labor markets it implies – because businesses have tended to react by raising prices to compensate, and that’s tended to prompt workers to press pay demands even more aggressively. The consequent spiral can be difficult to stop or even slow.

Of course, for this kind of action-reaction cycle to take hold, wages would first have to catch up with living costs. The June inflation and real wage figures show that workers might still be short of even that modest goal.

(What’s Left of) Our Economy: Wages Still Aren’t Inflating Much

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inflation-adjusted wages, Labor Department, labor market, manufacturing, private sector, recovery, wages, {What's Left of) Our Economy

At the start of this month, we got the new government figures on U.S. workers’ wages before adjusting for inflation, and they looked pretty good – at least by the dismal standards of this historically weak American economic recovery. Yet if wages aren’t keeping up with prices, then it’s harder to argue convincingly that workers are gaining ground. And this morning we got the latest (government-generated) reminder that by this crucial measure, wage growth remains unimpressive.

According to the Labor Department’s latest report, American private sector wages after inflation were flat between April and May (whose numbers are still preliminary). That’s better than the (unrevised) 0.09 percent monthly dip in April, but it shouldn’t fall under anyone’s definition of “good.”

Year-on-year, real wages still aren’t killing it, either. The May annual advance was 1.42 percent. Between the previous Mays, it was 2.33 percent. From May, 2009 through May, 2014, inflation-adjusted private sector wages actually fell, so progress is being made once again. But its rate is already slowing; in January, real wages increased on-year by 2.09 percent.

And since the recovery technically began, in June, 2009, real private sector wages are up a total of 3.69 percent. That’s over a period of nearly seven years!

Manufacturing in May continued its recent trend of outperforming the rest of the private sector in wage growth both before and after inflation. The 0.09 percent sequential real rise was the slowest since December’s (which was only fractionally better). But year-on-year, manufacturing wages improved by 2.26 percent in May. That’s faster than both the 1.72 percent advance from May, 2014 to May, 2015, and than the January yearly increase of 2.07 percent.

In addition, these real wage increases are particularly welcome because manufacturing paychecks were shrinking in inflation-adjusted terms for so much of the recovery. Indeed, even with the recent spurt, they’re still up only 2.24 percent since the official June, 2009 recovery onset – much less than the private sector overall.

Moreover, manufacturing employment has been falling lately rather than rising. This development further reinforces the view that its recent wage strength stems largely from a practice of laying off less experienced (and lower-paid) employees, rather than from stronger worker bargaining power, and therefore a genuinely tighter labor market.

When the American economy as a whole, or manufacturing in particular, can foster historically adequate wage growth and hiring increases at the same time, the nation will be entitled to worry about wage inflation. But not one moment before.

(What’s Left of) Our Economy: Inflated Claims of Real Wage Inflation

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BLS, blue-collar workers, Bureau of Labor Statistics, inflation, inflation-adjusted wages, labor market, private sector, productivity, recession, recovery, wages, workers, {What's Left of) Our Economy

This morning’s real wage figures from the Bureau of Labor Statistics (BLS) once again vividly remind us how important baselines are in measuring economic trends and evaluating their strengths. They just as vividly underscore the importance of overall inflationary and deflationary trends in the economy in calculating these wage data – which especially over the short term have nothing to do with workers’ genuine earnings, bargaining power, and success in keeping up with living standards. To me, the bottom line for these latest (January, 2016) numbers is that real wages in America continue to go nowhere.

BLS reported today that inflation-adjusted wages for the entire private sector rose by 0.38 percent month-on-month – the best sequential advance since August’s virtually identical reading. (Government workers aren’t measured here because their pay is determined overwhelmingly by politicians’ decisions, not fundamental labor market conditions.)

Moreover, the December monthly constant dollar wage improvement was revised up from 0.09 percent to 0.19 percent. As a result, the December year-on-year (and full-year 2015) figure increased from 1.82 percent to 2.01 percent. That’s the best such performance since 2008 – when many employers facing a strengthening recession were quickly shedding less experienced, lower-paid workers and therefore statistically pushing real wages way up.

Yet the new January number (which, like December’s, is still preliminary), means that January, 2015-January, 2016 after-inflation wage increases totaled only 1.14 percent. That’s much lower than 2014-2015’s 2.43 percent, but much higher than the previous 0.39 percent advance. In fact, the most recent January-January increase was the biggest such improvement 2009’s 3.70 percent – which was also boosted by the aforementioned recession-era downsizing strategy.

At the same time, here’s where those problematic economy-wide inflation data come in. January, 2015 was one heck of an unusual inflation month. Sequentially, core prices fell then by 0.64 percent. That’s the biggest drop by far since December, 2008, when the financial crisis was peaking and the economy seemed about to fall off a cliff. The harsh winter weather at the end of 2014 and the start of 2015 was clearly a big reason, and it has major effects on all comparisons based on January, 2015.

Another problem with this (and previous) January data: As I’ve previously noted, lots of state and local minimum wage hikes have kicked in during those months. These government-mandated decisions have as little bearing on labor market conditions as the government’s own pay levels.

So my own preference is to look over the longer term, and in particular, to compare real wage trends among recent economic recoveries – which provides the best apples-to-apples data. Unfortunately, BLS creates a problem here. Its figures on inflation-adjusted wages for all private sector workers only go back to March, 2006. So they can reveal what’s happened to these wages since the current recovery began – in June, 2009. (They’re up in toto by 3.39 percent.) But they can’t tell us what happened in previous recoveries.

One way to address the problem is to use BLS’ figures for production and non-supervisory private sector workers. This is of course a different group than all workers, but the data here go back to 1964, and these “blue collar” Americans currently make up more than 82 percent of the entire private sector workforce. As a result, they’re pretty representative.

During the current recovery, price-adjusted wages for this large group of U.S. workers is up 3.85 percent – a faster rate than that for all workers. And it’s a much faster rate than for the previous, bubble-era recovery (which was only a little shorter). Then, real blue-collar wages inched up by only 0.35 percent. Wages during this expansion are up less than during its 1990s counterpart (6.64 percent), And that’s the case even factoring in their different durations. That “Clinton boom” lasted nearly ten years – about one and a half times longer than the current expansion. But real wages advanced by nearly twice as much.

During all these expansions, real blue-collar wages have performed better than during the so-called Reagan recovery of the 1980s. During that expansion, which like the current recovery also lasted about six and one half years, these wages actually fell by 1.86 percent. Even though the significant expansion preceding the Reagan recovery was much shorter – lasting from only March, 1975 to the end of 1979 – inflation-adjusted blue-collar wages sank even faster – 3.19 percent. Then, of course, inflation was at recent historic highs.

Therefore, the current recovery looks pretty good, real wage-wise. But there’s one other expansion we can examine – that during the 1960s. Data for the entire upswing, which ran from February, 1961 through November, 1969, isn’t available from BLS. But between January, 1964, when the numbers begin, through the expansion’s end, inflation-adjusted non-supervisory wages shot up by 8.58 percent. No wonder this period is seen as a Golden Age by many of those old enough to remember it firsthand.

Two other developments also take much of the shine off today’s wage growth. First, the current expansion is getting long in the tooth, and thus it’s unclear how much more inflation-adjusted wages will rise going forward. And second, despite the big real wage increases of the 1960s, America’s productivity was rising much faster than today as well. So “let the buyer beware” still seems like good advice for information consumers today when confronted with claims of worrisome wage inflation.

(What’s Left of) Our Economy: One Measure of U.S. Job Quality Has Improved – For Now

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Federal Reserve, Janet Yellen, Jobs, JOLTS, labor market, openings, recession, recovery, {What's Left of) Our Economy

The JOLTS data for November came out this morning, and as RealityChek regulars know, I track it closely because Fed chair Janet Yellen views it as the best gauge of the American labor market’s health.

But as regulars also know, I dig deeper than she and her (humongous) staff seem to in order to find out how many of the job openings reported each month (along with hires and layoffs) are in positions that most Americans would want to hold. So I’m pleased to report that today’s figures contained some good news: Openings for low-wage jobs as a share of total actually fell off for the second straight month. For the moment, that reverses the more discouraging trend that’s held firmly since the last recession began just over eight years ago.

The low-wage totals can be calculated by adding up two categories clearly measured in the data – the retail sector and the leisure and hospitality sector – and then estimating the low-wage total inside the very large and diverse professional and business services sector. A reliable figure can be produced by assuming that the number of low-wage openings within this category is equal to the number of total professional and business services jobs represented by positions in its low-paying administrative and support services sub-sector.

For November (the latest data available), low-wage openings represented 32.67 percent of total job openings. That’s down from the 33.13 percent figure for October and from 33.74 percent in September. (The November figure will be revised at least once more, so the trend could still be even shorter-lived than it seems.)

At the same time, all these levels are still higher than those that have generally characterized the post-recession period. When that downturn began, in December, 2007, low-wage job openings accounted for 30.56 percent of the total. When the recovery got underway, in June, 2009, their share had fallen to 29.94 percent.

If American employers keep upping the share of better and better-paying jobs they’re offering to American workers, the nation could start taking seriously the notions that the economy is steadily recreating itself as a knowledge-oriented machine, and that the long-wounded labor market really is starting to heal. So far, however, anyone believing these propositions either isn’t looking at the facts, or measures such progress according to an unacceptably low standard.

(What’s Left of) Our Economy: So Many Job Openings – For So Little Pay

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Federal Reserve, Janet Yellen, job openings, JOLTS, Josh Zumbrun, labor market, The Wall Street Journal, {What's Left of) Our Economy

Wall Street Journal economics reporter Josh Zumbrun did an excellent job this week showing that Janet Yellen’s favorite gauge of the American labor market’s health has been recently been performing exactly how the Fed Chair has been hoping. The implication is that the case looks strong for the central bank to start raising interest rates – possibly as early as its meeting next week.

If Yellen – a noted labor economist – simply looks at the overall numbers in this JOLTS series, that assessment seems on target. But if she looks to see where the strength has been centered in this measure of the employment scene’s dynamism – and especially where job openings have increasingly been concentrated – she might be more cautious about tightening the country’s credit supply. For the new October figures show that their domination by low-paying sectors is up significantly.

My definition of low-paying sectors encompasses the retail industry, the leisure and hospitality industry, and the low-paying administrative and support services sector within the professional and business services category. The latter number isn’t explicitly reported by the Labor Department, which compiles all the JOLTS data. But I estimate it by (reasonably) assuming that administrative and support openings match this sub-sector’s share of the larger grouping’s total employment in a given month.

The total openings in these low-paying sectors came to 36.83 percent of all job openings in October. This preliminary number is actually a bit lower than the average for July through September: 37.23 percent, 36.63 percent, and 37.03 percent, respectively. But all of these numbers are considerably higher than last October’s final 33.26 percent.

And they’re higher still than the levels at the start of the last recession (30.46 percent) and at the downturn’s end (29.48 percent). Couple these findings with the share of hirings accounted for by the government-subsidized private sector of the economy, and for a Fed that portrays itself as being “data dependent,” and that prizes the JOLTS figures, the result isn’t exactly screaming “Mission accomplished” for America’s beleaguered workforce.

(What’s Left of) Our Economy: Minimum Wage Hikes? Never Heard of ‘Em in Jobs Analyses

Tags

(What's Left of) the Economy, Jobs, labor market, minimum wage, recovery, slack, wages

Remember the minimum wage?  You know, one of the centerpieces of President Obama’s economic program?  And a cause celebre among progressives in the United States?  Apparently most of the Mainstream Media didn’t – as made clear by most of its reports on this morning’s official employment data.  They crowed about the strong monthly wage gains recorded for U.S. workers in January, but never mentioned all the minimum wage hikes that went into effect last month.

These wages rose in no less than 21 states, both because voters or legislatures approved new increases, and because previously scheduled increases went into effect.  And some of those states were among America’s biggest (notably, Florida, New Jersey, New York, and Ohio) while others were respectably in the middle (like Colorado, Maryland, Massachusetts, Minnesota, Missouri, and Washington).

I’m not enamored with raising the minimum wage as a poverty-fighting measure – let alone a reform that will help the middle class.  (At the same time, some labor union contacts of mine have sent me via emails that I don’t yet have permissioon to make public impressive evidence that the effects of such increases have rippled up the income ladder.)

But my views of the minimum wage increase aren’t the point here.  The point instead is that such increases are products of government fiat.  They have absolutely nothing to do with the fundamental  health of the labor market, including the issue of whether this market is getting tight enough to start boosting workers’ paychecks to a respectable degree.

You’d think that reality was pretty obvious, especially given all the attention minimum wage issues have received.  But the hikes were completely ignored in the coverage of The New York Times, The Washington Post, the Financial Times, The Wall Street Journal, Reuters, and The Economist.  They were referred to by Bloomberg and by Marketwatch.com.

Actually, Bloomberg provided some interesting reasons for thinking that the minimum wage hikes had relatively little to do with the January wage increases.  But the evidence was hardly dispositive.  Further, the article’s reference to “one-time boosts in pay rates” overlooks the fact that in several states (including Maryland, Minnesota, and New York at the very end of the year) the minimum wage will go up later in 2015.  Several states, moreover (including California, Maryland, Massachusetts), will raise their minimum wages in 2016 and beyond, and numerous others have regularly indexed the wage to inflation or some other measure.

All of which means that minimum wage laws are likeliest to have a growing impact on the U.S. labor market going forward. So whenever you hear some politician or economist or pundit pronouncing on how well the employment picture has improved since the recession’s official end (in mid-2009), make sure to check whether they’ve included these artificial wage increases in their calculations.  For if they haven’t, let the reader beware.