WASHINGTON — The Coalition for a Prosperous America (CPA) today announced that the U.S. Private Sector Job Quality Index (JQI) fell to 79.80 in December, down 0.27% from the previous month, reflecting faster growth in low-wage jobs in the month. The fall in the JQI was driven by substantial growth in low-wage jobs in food services and accommodation as businesses hire aggressively to meet the needs of consumers who are increasingly patronizing restaurants, travel, and accommodation services as fear of Covid subsides. There were also smaller increases in employment in manufacturing, construction, and professional/business services, which tend to be high-quality, high-wage sectors.
The Bureau of Labor Statistics reported today that the U.S. added 467,000 workers to payrolls in January. Job growth continues to be strong, although the labor force participation rate, at 62.2% is still 1.2 percentage points (3.1 million people) below the level of February 2020. The manufacturing workforce grew by 13,000 jobs in January and by 375,000 jobs over the last twelve months.
The JQI report shows that in December, the mean weekly income of all U.S. private sector production and nonsupervisory workers rose 0.6% to $909.50. That figure was up 5.92% on the December 2020 level, slightly below the annual inflation rate of 7.0% in December. However the JQI inflation-adjusted data shows some positive impact on income distribution from the wrenching changes that Covid has imposed on the U.S. labor force. Adjusted for inflation, the mean weekly income of low-quality jobs rose by 1.11% over the year earlier level, showing that those workers are doing slightly better than inflation. The boost to living standards for many workers in low-quality jobs was even more striking in certain sectors. For example, nonsupervisory workers in full-service restaurants have seen a 19.79% increase in their year-on-year inflation-adjusted income. The inflation-adjusted increase for workers in bars was 16.12% and for those in traveler accommodation was an impressive 27.64%.
“The combination of a declining Job Quality Index, rising employment levels and powerful jumps in real income in certain sectors suggests that in the short term the U.S. economy is slowly and steadily returning to normal, with perhaps an enduring boost in pay levels for workers in some low-quality sectors,” said CPA chief economist Jeff Ferry. “But it is hard to see these boosts in real income being sustained over the long term unless the government implements structural reform to increase the mix of high-paying industries and high-quality jobs in the U.S. economy. On a day when it has emerged that the Biden administration is undermining the position of U.S. manufacturers of solar power equipment, it is hard to be optimistic about the long-term outlook for U.S. workers.”
The Job Quality Index measures job quality for U.S. production and non-supervisory workers by comparing workers’ weekly wages to the mean weekly wage for all non-supervisory workers. Those jobs above the mean are classified as high-quality and those below the mean are low-quality.