WASHINGTON — The Coalition for a Prosperous America (CPA) today announced that the U.S. Private Sector Job Quality Index (JQI) was 83.10 in August compared with 82.99 in July. That’s the fourth straight month of growth after bottoming out in March of this year. However, the index – which measures the three month rate of growth between non-managerial higher quality jobs and low quality jobs – is still below 2023 levels and has yet to recover to pre-pandemic levels.
Following Friday’s jobs numbers by the Bureau of Labor Statistics (BLS), we see employment in manufacturing fell by 24,000 in August with little net gains in jobs in this high paying sector over the last year.
12-Month JQI: Signs of Stalling
The slight uptick in the JQI is due to a rise in high-quality high-wage sectors within the business services and health care sectors.
The mean weekly wage income of all production and non-managerial jobs as of the current reading (which reflects the employment picture last reported by BLS in July) increased to $1,015.64, a change of +0.27% from its revised level the month prior. The JQ-Instant™ preliminary read of the BLS’s reported 142,000 employment gains in all private sector, non-farm payrolls for August shows that 59.22% of the gains in private sector jobs were in industry sectors offering jobs with an average weekly income below the mean weekly income of all production and non-managerial jobs, which suggests hiring in lower paying employment.
The JQI, developed by CPA in partnership with other economists, divides the U.S. private sector non management 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 slight increase in the JQI number is caused by a higher proportion of the jobs gained being in high-quality job categories, which is good news.
Today’s JQI report is reflective of the BLS number coming in below expectations (142,000 positions added gained versus 161,000 consensus). However, the large value of the JQ-Instant index, which is a separate index from the one that calculates three months’ worth of data, shows that most job additions were in lower-paid sectors.
Higher Pay is Gray, Lower Pay is Blue
Among the winners in terms of the number of positions added were the Leisure and Hospitality sector (46,000) and Healthcare and Social Assistance (44,000). Positions were lost in manufacturing (25,000 positions).
The JQ-Instant value could have been higher if not for added positions in sectors related to infrastructure work (34,000 added in Construction) and for the loss of low-paid jobs in Retail (11,100 positions lost). With such a high addition to low-paid jobs (close to 60% of all new hires), it is hard to say that the added number of jobs in the latest BLS release represents a growth in middle class employment.
Here are some of the high wage manufacturing and non-managerial sectors that saw the biggest percentage gains in wages over the last 12 months, based on their mean weekly wage from July 2023 and July 2024.
- Engine, turbine and power transmission manufacturing: +43%
- Oil and gas extraction: +16%
- Computer and electronic products manufacturing: +13%
- Commercial machinery manufacturing: +10.5%
- Mining: +10%
About the JQI Index
The JQI assesses job quality in the United States by measuring desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs. The JQI offers a near-real time analytical tool to policymakers, researchers and financial market participants with relevance to a variety of trends in the economy at large. While economists and international organizations have developed other, complementary conceptions of job quality such as those addressing the emotional satisfaction employees derive from their jobs, the JQI interprets “job quality” as meaning the weekly dollar-income a job generates for an employee. The JQI analyzes a representative sample of the economy using production and non-supervisory job (P&NS) data from 180 different industry groups.
