Improving Job Quality?

Today’s Survey of Employment, Payroll and Hours  doesn’t seem to support the rosy view that our labour market is turning out better jobs and higher wages.

Of the 285,000 payroll jobs created over the past year (August 06 to August 07, seasonally adjusted), almost half (46% or 130,000) were in the two lowest-paid broad industrial sectors, retail trade (85,000 net new jobs), and accommodation and food services (45,000 net new jobs.)  While net job growth in these sectors made up almost half of all job growth, they accounted for just one in five of all payroll jobs one year ago. In short,  at the margin, job growth is heavily tilted to low wage service industries.

The highly disaggregated sectoral job growth data base which CIBC crunch to generate their Job Quality Index would seem to suggest that job quality is improving within industrial sectors in such a way as to offset the negative impact of stronger growth within the two lowest wage sectors. However, hourly wage growth in the two low wage sectors seems pretty subdued. In the year August 06 to August 07, hourly wages of hourly-paid workers actually fell in retail trade (from $15.25 to $14.88) and hourly wages grew by just 2.6% in accommodation and food services, to the princely level of $10.76 per hour.

With employment in lower paid sectors rising and little or no real wage growth in those low wage sectors, the picture seems to  be more one of rising inequality in the job market than one of rising job quality.

Even at the level of averages, wages seem pretty subdued. Average hourly earnings of hourly paid workers rose by just 2.2% in the year to August, and average weekly earnings of all workers were up by 3.1%. Compare to  consumer price inflation of  2.5% (September.)