The economy is creating jobs, but are they ‘good’ jobs?

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Kansas City listener John Bowen asks:

I’ve heard of a job offer, but I don’t know the details. Are these minimum wage jobs? where was the job? What if we lost millions of factory jobs in the Midwest and added a million minimum-wage coffee shop jobs in Silicon Valley?

The U.S. Bureau of Labor Statistics releases its monthly employment report, headlining the number of jobs gained or lost.

It provides a bird’s-eye view of the economy and shows its overall health.

But while these flashy numbers are getting the most attention, there are legitimate concerns about the types of jobs being added. You can get 2,000 low-paying jobs for a net gain of 1,000 new jobs,” noted listener John Bowen.

Luckily, there’s even more data in a report posted on the Department of Labor’s website, also known as the Employment Situation.

“Employment reports give us information from two very different perspectives. Basically, there is information in employment reports from what we call establishments. Wendy Edelberg, a senior fellow in economic studies at the Brookings Institution, says this is how much net employment is created in a variety of industries, including construction, finance, retail, wholesale, manufacturing and education. is shown.

Then there’s the “Household Survey Data” component of the report, where the Department of Labor collects information from individual people.

“In this way, we can see if an individual is looking for a job and can’t find one, is not looking for a job, or has two jobs,” says Edelberg. This section shows the unemployment rate and labor force participation rate, both broken down by race and gender.

While the Jobs Report does not directly categorize jobs by whether they are high or low wages, Facilities Data allows you to look at the average hourly and weekly wages of employees by industry.

“You can use the job reports to get insight into the quality of job openings. ,” said Peter Phillips, an economics professor at the University of Utah. “So we can ask, ‘Are most jobs created in high-wage industries or low-wage industries?'”

What you can learn from job information

Phillips said the most jobs were created in the leisure and hospitality industry in its January jobs report, which showed the US economy added 517,000 jobs in the month.

According to Phillips, the industry has the lowest salaries among the various categories included in the Labor Department’s survey. The average hourly wage for Leisure and Hospitality in January was $20.78, with a combined average of $33.03 for him.

“The industries that created the most jobs in January were those with lower wages,” said Phillips.

And that might raise concerns, he said. Sure, we’re adding jobs, but they’re underpaid.

But one caveat he added is that the industry has been losing jobs due to shutdowns since the pandemic began. When that happens, their jobs are growing faster than other industries that have been hit less hard during the pandemic,” he said.

He noted that leisure and hospitality are catching up, so this monthly snapshot does not mean that the industry will become a “growth engine” for the economy going forward.

Christopher Kayes, a professor at the George Washington University School of Business, said individual companies could lay off high-wage workers and replace them with low-wage workers. He explained that there are different ways to do this.

“Some industries, such as banking, are notorious for weeding out underperforming employees by laying off 5% or 10% of their workforce each year and replacing these with lower-paid college graduates. It’s expensive,” said Kayes. He argues that another way some companies are replacing high-wage workers with low-wage workers is to “shut down” in high-cost areas like California and New York City, and then have lower living costs and lower wages. America.

But Kay’s bigger concern is that “companies aren’t giving their employees a fair share of profits.”

Positive headline numbers on the jobs report could mask low-paying jobs while losing high-paying jobs in the tech industry, for example. The potentially high-paying tech company has cut tens of thousands of jobs in a high-profile string of layoffs since last year.

Peter Muther, prime minister and professor of economics at the University of Missouri, pointed out that some aspects of the employment report can be considered positive even in this situation. He said it was because the employees who got the job were doing better than before.

What you don’t know from job postings

The monthly jobs report also doesn’t show where jobs are being added, but the Department of Labor publishes other data showing jobs at the metropolitan and state levels.

But the Brookings Institution’s Edelberg said the state-by-state data “can be noisy” as events like bad weather affect jobs. That said, you should be careful with these numbers and “don’t pay too much attention to any particular blip,” she added.

Job reports also show hourly and weekly earnings, but with limitations. Edelberg said there was a big drop in jobs early in the pandemic, and some have recovered since then. But not all industries have seen jobs come back.

“At the same time, employment reports were showing that earnings looked pretty good,” Edelberg said.

But a closer look at the numbers, Edelberg says, reveals that they only capture income for people who already have a job (the data focuses on those who are actually employed). (because there is).

“When the average hourly wages of those who are still out of work are lower than those who are still in employment, employment reports show that average hourly wages are rising,” Edelberg said.

But Edelberg said there are other metrics that don’t have such problems. The Labor Department also publishes what it calls the Cost of Employment Index, which measures “changes in compensation for specific jobs,” Edelberg said.

But she said there are trade-offs. That means it’s released quarterly rather than more timely than the monthly employment report.

Another limitation of job reports is that while they can tell us about the quality of these jobs, Philips cannot tell if those jobs are providing employees with a particular benefit.

“Does the job come with health insurance? Jobs Report won’t tell you,” he said.

According to Philips, the 517,000 jobs created in January include legally required benefits such as social security, unemployment and workers’ compensation. However, he noted that he did not know whether these jobs were offered in conjunction with employer-provided health insurance or employer-provided pensions.