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| FILE - This July 15, 2013 photo, people line up at the job fair in South Burlington, Vt. The 162,000 jobs the economy added in July 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 percent of the positions employers added in July. Low-paying retailers, restaurants and bars supplied more than half July's job gain. |
WASHINGTON
(AP) -- The 162,000 jobs the economy added in July 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 percent of the positions employers
added in July. Low-paying retailers, restaurants and bars supplied more
than half July's job gain.
"You're getting
jobs added, but they might not be the best-quality job," says John
Canally, an economist with LPL Financial in Boston.
So
far this year, low-paying industries have provided 61 percent of the
nation's job growth, even though these industries represent just 39
percent of overall U.S. jobs, according to Labor Department numbers
analyzed by Moody's Analytics. Mid-paying industries have contributed
just 22 percent of this year'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 to
$23.98 an hour.
Among those feeling the
squeeze is Elizabeth Wilkinson, 28, of Houston. After losing a
$39,000-a-year administrative job at Rice University in January,
Wilkinson found work at an employment agency for $15 an hour. Yet she's
had to supplement that job with part-time work as a waitress.
"This
morning I put $1.35 worth of gas in my car because that is all the
money that I had," Wilkinson said via email. "It's very difficult to
survive on $30,000 (a year), and I am living paycheck to paycheck."
Part-time
work has made up 77 percent of the job growth so far this year. The
government defines part-time work as being less than 35 hours a week.
Weak
economies overseas have reduced demand for U.S. goods and, as a result,
for better-paying U.S. jobs in manufacturing. Government spending cuts
have taken a toll on some middle-class jobs, too.
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.
"You're
always going to have jobs in the retail sector," says Michael
Evangelist, a policy analyst with the liberal National Employment Law
Project, which advocates on behalf of low-wage workers.
Consider
Mike Ulrich, 30, who earned a master's degree in public administration
in May from the University of Colorado. Ulrich hasn't been able to find
work that requires a college degree. Instead, he works at a hardware
store in Spokane, Wash., earning the state's minimum wage: $9.19 an
hour.
Not all July's new jobs were low-paying.
Local schools hired more than 10,000 teachers and other employees.
Financial firms added 15,000.
The surge in part-time employment began in April.
Jason
Furman, the new chairman of the White House's Council of Economic
Advisers, says part-time employment has been inflated by the
across-the-board budget cuts that began to bite in March, forcing some
federal workers to take time off without pay.
Analysts
say 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 and into 2015.)
But
Furman disputed the idea that the health care law will ever drive
companies to favor part-timers over full-timers and says the notion
makes even less sense now: "Why would they shift people to part-time for
something that's not going to happen until 2015?"
Scott
Anderson, chief economist at Bank of the West, thinks concerns about
the rise in part-time work are overblown. The government's figures on
part-time jobs are highly volatile, Anderson notes. The big gain this
year could quickly reverse, he says.
Yet for
the most part, Daniel Alpert, managing partner of Westwood Capital,
wrote in a report last month, "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 this year even though it grew at a tepid
annual rate below 2 percent 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."
