WASHINGTON — The Coalition for a Prosperous America (CPA) today announced that the U.S. Private Sector Job Quality Index (JQI) was 83.58, up by +0.58% from the preceding month. Moreover, the overall September 2024 Jobs Report from the government’s Bureau of Labor Statistics showed strong job growth. Employment was up 254,000 compared to the 150,000 consensus expectations.
The JQI, developed by CPA in partnership with other economists, divides the U.S. private sector nonmanagement labor force of 109.6 million employees into 16 sectors and 164 subsectors to evaluate economic trends in national employment. Sectors where the average weekly wage is above the average weekly wage for this group are termed “high-quality jobs” and those below are “low-quality jobs.” The data shows that for over 30 years the U.S. economy has created more low-quality jobs than high-quality.
The increase in the September JQI was caused by a higher proportion of jobs qualifying as high-quality jobs. While total employment in current high-quality job categories was down by 0.05% in August (compared to a 0.19% rise in low-quality job growth), average weekly income growth pushed two sectors from the low-quality job category to the high-quality job category. These sectors that now qualify as high-quality jobs are Electrical equipment, appliance, and component manufacturing as well as Support activities for air transportation. This development may reflect a bettering income distribution and income equality if continued over the long-run. Total wage growth for high-quality jobs was 0.76% in August, while wage growth for low-quality jobs was flat at 0.02%.
In more good news, there were 72,000 in positive employment revisions regarding the past two months of data, a slight fall in the unemployment rate (from 4.2% to 4.2%), and a month-on-month rise in wages by 0.4%. This positive jobs report will also likely reduce pressure on the Federal Reserve to continue lower interest rates. In September, the Federal Reserve cut its benchmark interest rate by an unusually high 0.5%, and signaled it would also lower the interest rate by another 0.5% this year. The uptick in the jobs market may cause the Fed to slow the pace of rate cuts from the signaled 0.5% to 0.25%.
However, it may be a bit too early to start singing praises. Recent BLS employment estimates have had some major data discrepancies and corrections, including an 818,000 negative employment revisal in August 2024. So the newly reported jobs numbers should be taken with a grain of salt. According to ING, the ISM, NFIB and the Fed’s own Beige Book are not suggesting that hiring is anywhere close to this. And of the 254,000 total job gains that are in the report, 150,000 of them are in low wage / low hours service sectors, namely Leisure and Hospitality (with 78,000) and Healthcare and Social Services (with 72,000).
The flat high-quality employment total for August is reflected in the specific high-quality job sectors, with gains in sectors like Agencies, brokerages, and other insurance related activities (up 0.69%) being counteracted by losses in sectors like Transportation equipment manufacturing (down 0.84%). Meanwhile, only one high-quality job sector experienced a fall in wages, Management, scientific, and technical consulting services (down 0.22%). This was more than made up for by wage growth in high quality job sectors like Automobile dealers (up 1.88%), Management of companies & enterprises (up 1.66%), and Architectural, engineering, and related services (up 1.26%).
Wage growth in low-quality job sectors were much more mixed. With some sectors doing quite well, including Services to buildings & dwellings (wages up 1.65%) and Full-service restaurants (wages up 1.12%). And other sectors seeing a decline in weekly wages, including Employment services (down 1.39%) and Skilled nursing care facilities (down 0.77%). Employment services had an especially bad month as total employment was also down by 0.34%. But low-quality job gains were still positive due to sectors like Individual and family services (with employment up 0.77%) and Home health care services (up 0.33%).
For manufacturing, total employment fell by 0.23% in August but wage growth was a solid 0.54%. High-quality manufacturing job losses were felt the most in Electrical equipment, appliance, and component manufacturing (down 1.14%), Transportation equipment manufacturing (down 0.84%), and Primary metal manufacturing (down 0.74%). But the most severe losses were for the low-quality manufacturing job category of Textile mill manufacturing, where employment fell by 1.8% in August. The only manufacturing sector to see substantial job growth was the high-quality job sector of Chemical manufacturing (up 1.15%).
Manufacturing wage growth was powered mostly by the high-quality job sector Electrical equipment, appliance, and component manufacturing (up 2.75%) and the low-quality job sector Textile mill manufacturing (up 2.35%). Even though Chemical manufacturing had the best employment gains, it also had the largest wage losses (down 1.60%).
Solid September Job Quality Index and Total Employment Growth, but Gains Tilted Towards Low Wage Service Jobs along with Declining Manufacturing Employment
WASHINGTON — The Coalition for a Prosperous America (CPA) today announced that the U.S. Private Sector Job Quality Index (JQI) was 83.58, up by +0.58% from the preceding month. Moreover, the overall September 2024 Jobs Report from the government’s Bureau of Labor Statistics showed strong job growth. Employment was up 254,000 compared to the 150,000 consensus expectations.
The JQI, developed by CPA in partnership with other economists, divides the U.S. private sector nonmanagement labor force of 109.6 million employees into 16 sectors and 164 subsectors to evaluate economic trends in national employment. Sectors where the average weekly wage is above the average weekly wage for this group are termed “high-quality jobs” and those below are “low-quality jobs.” The data shows that for over 30 years the U.S. economy has created more low-quality jobs than high-quality.
The increase in the September JQI was caused by a higher proportion of jobs qualifying as high-quality jobs. While total employment in current high-quality job categories was down by 0.05% in August (compared to a 0.19% rise in low-quality job growth), average weekly income growth pushed two sectors from the low-quality job category to the high-quality job category. These sectors that now qualify as high-quality jobs are Electrical equipment, appliance, and component manufacturing as well as Support activities for air transportation. This development may reflect a bettering income distribution and income equality if continued over the long-run. Total wage growth for high-quality jobs was 0.76% in August, while wage growth for low-quality jobs was flat at 0.02%.
In more good news, there were 72,000 in positive employment revisions regarding the past two months of data, a slight fall in the unemployment rate (from 4.2% to 4.2%), and a month-on-month rise in wages by 0.4%. This positive jobs report will also likely reduce pressure on the Federal Reserve to continue lower interest rates. In September, the Federal Reserve cut its benchmark interest rate by an unusually high 0.5%, and signaled it would also lower the interest rate by another 0.5% this year. The uptick in the jobs market may cause the Fed to slow the pace of rate cuts from the signaled 0.5% to 0.25%.
However, it may be a bit too early to start singing praises. Recent BLS employment estimates have had some major data discrepancies and corrections, including an 818,000 negative employment revisal in August 2024. So the newly reported jobs numbers should be taken with a grain of salt. According to ING, the ISM, NFIB and the Fed’s own Beige Book are not suggesting that hiring is anywhere close to this. And of the 254,000 total job gains that are in the report, 150,000 of them are in low wage / low hours service sectors, namely Leisure and Hospitality (with 78,000) and Healthcare and Social Services (with 72,000).
The flat high-quality employment total for August is reflected in the specific high-quality job sectors, with gains in sectors like Agencies, brokerages, and other insurance related activities (up 0.69%) being counteracted by losses in sectors like Transportation equipment manufacturing (down 0.84%). Meanwhile, only one high-quality job sector experienced a fall in wages, Management, scientific, and technical consulting services (down 0.22%). This was more than made up for by wage growth in high quality job sectors like Automobile dealers (up 1.88%), Management of companies & enterprises (up 1.66%), and Architectural, engineering, and related services (up 1.26%).
Wage growth in low-quality job sectors were much more mixed. With some sectors doing quite well, including Services to buildings & dwellings (wages up 1.65%) and Full-service restaurants (wages up 1.12%). And other sectors seeing a decline in weekly wages, including Employment services (down 1.39%) and Skilled nursing care facilities (down 0.77%). Employment services had an especially bad month as total employment was also down by 0.34%. But low-quality job gains were still positive due to sectors like Individual and family services (with employment up 0.77%) and Home health care services (up 0.33%).
For manufacturing, total employment fell by 0.23% in August but wage growth was a solid 0.54%. High-quality manufacturing job losses were felt the most in Electrical equipment, appliance, and component manufacturing (down 1.14%), Transportation equipment manufacturing (down 0.84%), and Primary metal manufacturing (down 0.74%). But the most severe losses were for the low-quality manufacturing job category of Textile mill manufacturing, where employment fell by 1.8% in August. The only manufacturing sector to see substantial job growth was the high-quality job sector of Chemical manufacturing (up 1.15%).
Manufacturing wage growth was powered mostly by the high-quality job sector Electrical equipment, appliance, and component manufacturing (up 2.75%) and the low-quality job sector Textile mill manufacturing (up 2.35%). Even though Chemical manufacturing had the best employment gains, it also had the largest wage losses (down 1.60%).
Figure 1. Job Quality Index 1990-2024
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