Thursday, June 21, 2018
Editorials

Seeing growth in jobs, but not in pay

The July jobs report released by the Labor Department on Friday contained a lot of good news. The economy added 209,000 jobs in the month. The unemployment rate ticked down to 4.3 percent. Further, the report marked a significant milestone: The U.S. labor market has finally recovered everything it lost in the Great Recession.

President Donald Trump was so eager to take credit for the good news that he tweeted just 15 minutes after the report was released that "I have only just begun." Federal rules require that to maintain neutrality, officials must wait an hour before commenting.

Trump's anti-regulatory efforts and the promise of tax cuts probably have contributed to business confidence, but in fact job growth in his first six months in office matches that of President Barack Obama's final six, suggesting a trend was well under way.

There are quirks in what is overall good economic news. Average hourly earnings are up 2.5 percent on a 12-month basis, not as much as you'd expect when unemployment is so low.

The labor force participation rate — the number of people 16 and older who are either employed or actively seeking work — was up only slightly at 62.9 percent. But more workers 25 and older without a high school education were able to find jobs than at any time since 2011.

One astounding statistic: Of the 209,000 jobs created in July, more than one-quarter were in "food service and drinking places." For whatever reasons, restaurant and bar business was picking up and owners added staff.

Such establishments don't usually pay very well, which could account for some of the overall low wage growth. These are often entry-level jobs, unlikely to support middle-class lifestyles. But they are what's available, and Americans were grabbing them.

The health care sector added 39,400 jobs, 11,100 of them in home health care services. As America's population ages, this sector has seen continued growth, but again, these are generally not solid middle-class jobs with good wages and benefits.

The retail sector has shed jobs since 2001 and this year has continued to lose about 5,000 a month. Some 355,000 jobs have been added in e-commerce since 2007, but again these tend not to be middle-class jobs.

The Hamilton Project at the Brookings Institution has been tracking recovery of the labor market since the start of the Great Recession of 2007-2009. By April 2014, it reported, the total number of jobs had recovered, but because the nation's population had been growing and aging, labor supply and demand did not recover until last month.

That's the good news. But often these are different sorts of jobs than those of 10 years ago. The solid-salary middle of the American job market is hollowing out.

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