WASHINGTON — The Coalition for a Prosperous America (CPA) today announced that the U.S. Private Sector Job Quality Index (JQI) was 81.56, down by -0.35% from the preceding month. The overall April 2024 Jobs Report from the government’s Bureau of Labor Statistics was also lower than expected, a potential early sign of an economic slowdown helped by persistent structural issues in the US labor market as shown in the JQI.
The April Jobs Report showed the US economy adding 175,000 jobs in April and the unemployment rate rising slightly to 3.9%. This was below expectations from most economists, who had expected about 240,000 jobs to be added and unemployment to remain at 3.8%. A cooldown in the labor market will increase calls for interest rate cuts to stimulate job growth, but this is far from certain to happen as the Federal Reserve has recently indicated it will keep interest rates high to further bring inflation down closer to 2%.
A below-expectations jobs report and a continuing decline in the JQI are not good signs for the U.S. economy. Not only is job growth slowing, but the jobs that are added are increasingly lower quality. The top industries adding jobs are primarily in low-paid, low-quality job sectors. Jobs in these categories are largely below the US average weekly wage, showing US job gains are skewed toward lower-quality job groups.
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.
This most recent JQI continues with this trend. Overall, between February and March, high-quality job growth increased 0.02%, while low-quality job growth increased 0.11%.
Among high-quality jobs, the top subsectors by job growth were Hospitals, with 29,300 jobs added (a 0.6% increase), followed by Residential building construction with 8,800 jobs added (a 1.5% increase). Low-quality subsectors added far more jobs during this time though. The largest growth low-quality subsectors were General merchandise retailers, with 26,200 jobs added (up 0.85%), Home health care services, with 17,400 jobs added (up 1.1%), and Services to buildings & dwellings, with 13,600 jobs added (up 0.7%).
According to the government’s report, manufacturing jobs growth continues to be poor. Total manufacturing jobs fell by 0.2% in March and recovered only by 0.02% in April. Overall, April manufacturing job totals are down 15,000 from February and down 30,000 jobs from January. The largest manufacturing job losses in March were the high-quality job subsectors of Fabricated metal product manufacturing, with 4,100 jobs lost (down 0.4%), and Computer and electronic product manufacturing, with 2,700 jobs lost (also down 0.4%). Many other manufacturing subsectors also experienced job losses, including Electrical equipment, appliance, and component manufacturing (down 2,600 jobs, 1%) and Furniture and related product manufacturing (down 1,900 jobs, 0.8%).
Overall wage growth is up 0.39% across all jobs in March. Manufacturing wage growth is only slightly below average at 0.34%. However, this is largely propped up by high growth in Textile mill manufacturing wages (up 4.75%). Excluding this subsector, manufacturing wages decreased 0.03% in March.
Wage growth was strong in the high-quality job subsectors, where total wages rose 0.56%. Computer systems design & related services (up 1.4%) and Building equipment contractors (up 0.75%) were the biggest contributors for high-quality jobs. Meanwhile, wages for low-quality jobs were flat. Wages for low-quality subsectors such as Grocery and convenience retailers were up 1.56%, and Warehousing and storage wages were up 0.73%. However, wages for General merchandise retailers fell by 0.94%), and Traveler accommodation wages fell by 0.91%.
Figure 1. Job Quality Index 1990-2024
