Bloomberg News

Bulk of U.S. Payroll Gain in Jobs Paying Less-Than-Average Wages

June 07, 2013

Occupations paying below-average wages accounted for more than half of last month’s U.S. payroll increase, a dynamic that may restrain consumer spending and the economic recovery.

Retailers, the hospitality industry and temporary-help agencies accounted for 96,300, or 55 percent, of 175,000 jobs added in May, figures from the Labor Department showed today in Washington.

“It’s not just jobs, it’s the kinds of jobs we’re creating,” said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. “We need to see more broad-based and even growth in the economy to see better jobs return. We’re still relying too much on the part-time and contingent workforce.”

The composition of the employment gain caused hourly earnings for all employees to stagnate at $23.89 on average last month, up a cent from April. They rose 2 percent over the past 12 months, compared with year-to-year increases averaging 3.5 percent in the 10 months leading up to the recession that began in December 2007.

The leisure and hospitality industry, which includes hotels, restaurants, casinos and amusement parks, added 43,000 workers to payrolls last month. On average, those employees are paid $13.45 an hour, the lowest of any of the 10 major employment categories, according to the Labor Department.

Retailers added 27,700 jobs in May, with an average hourly wage of $16.63. Temporary help accounted for 25,600 jobs with an average wage of $15.74 an hour.

Less Pay

Other lower-paying occupations, including ambulatory and home health care services, also posted gains last month.

In contrast, construction companies, which pay employees an average $26.06 an hour, added 7,000 jobs in May. Manufacturing, which pays $24.22 an hour, lost 8,000 jobs.

It’s not unusual to see low-wage job growth when unemployment is high, said Heidi Shierholz, an economist at the Economic Policy Institute in Washington, which gets some of its funding from labor unions.

“Low-quality jobs are always available but go unfilled when there are other jobs,” Shierholz said. “At a time like this, workers have to settle for anything they can get.”

There were 7.9 million people working part-time in May for economic reasons, meaning they preferred full-time work but couldn’t get it, according to Labor Department data. While that is down from the record 9.23 million reached in September 2010, it’s up from the 4.4 million on average during the previous expansion.

Twenty-one percent of all job losses during the recession were in occupations paying median hourly wages of $13.83 or less, according to the National Employment Law Project in New York, a non-profit employee-advocacy group. By contrast, those occupations accounted for 58 percent of new positions during the recovery from February 2010 to March 2012.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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