Job Quality Index and average wages improved—but for “wrong” reasons
Washington. The latest monthly jobs report shows a surprising increase in U.S. non-farm payroll employment for May. Overall employment rose by 2.5 million jobs, with the unemployment rate declining to 13.3 percent. An evaluation of the data by researchers at the Coalition for a Prosperous America (CPA) suggests the possibility that the U.S. economy may have already started to bounce back from the COVID-19 crisis. CPA notes that the U.S. manufacturing sector added back an encouraging 225,000 jobs in May, a significant reversal of the stunning 1.3 million factory jobs lost in April.
Complicating things is an unprecedented rise in the monthly U.S. Private Sector Job Quality Index (JQI), a new data tracker issued by CPA and its partners. The JQI climbed to a level of 81.31, which shows that a disproportionate number of low-wage, low-hour positions were lost in the immediate aftermath of the coronavirus crisis. Essentially, CPA economists found that 15.3 million production and non-supervisory jobs (P&NS) were lost in the wake of COVID-19. The predominance of low-quality jobs being lost reflects the vulnerability of such employment throughout the overall economy.
The JQI paradoxically improved due to an outsized loss of these vulnerable, lower-paying jobs. For the same reason, JQI data actually shows a 4.7 percent rise in the average weekly wage of P&NS jobs, to $840.50. This reflects the impact of the U.S. economy rapidly shedding so many of these less stable, “low quality” jobs.
“We’ve never seen economic statistics like this before,” said Jeff Ferry, CPA’s Chief Economist. “For example, in the three months to May, we lost 7.04 million jobs (42 percent) in leisure and hospitality employment. Nevertheless, there are promising indicators that a bounce-back is underway. Indicators like monthly car sales by some manufacturers in May, a recent uptick in airline bookings, and some surprisingly good results from broad-based industrial and retail companies suggest that we could see strong re-employment later this year for many of the millions who have lost their jobs.”
“We are extremely pleased with this jobs report,” said Michael Stumo, CEO of the CPA. “Washington’s unprecedented actions helped mitigate what could have been a larger disaster. Policymakers should continue to be aggressive, not complacent, with COVID disaster relief for those many millions of businesses and workers struggling.”
Stumo continued, “America now needs a large and creative industrial strategy to re-shore production of pharmaceuticals, medical devices, and many other critical industries. This is not the time for Congress or the administration to be weak. We need a massive infrastructure plan—rivaling or exceeding FDR and Eisenhower efforts—lasting 10 years, with a serious focus on sourcing ‘Made in America’ inputs. Bold action to realign the overvalued dollar is a must. And more tariffs are needed to prevent the coming onslaught of stockpiled Chinese and global goods that sit unsold in warehouses across the world.”
CPA continues to advocate a ‘Made in America 2030’ plan to rebuild economic and national security. Read more.