U.S. employers added a disappointing 162,000 jobs in July and many economists are more worried about the types of jobs that are being added. Job growth has skewed toward part-time work in low-wage industries. Retailers, restaurants and bars led job gains accounting for 85,000 jobs.
August 4, 2013
U.S. employers added a disappointing 162,000 jobs in July, but some economists are even more concerned about the types of jobs the economy is generating.
Job growth in recent months has skewed toward part-time work in low-wage industries, and that trend continued in July, Bureau of Labor Statistics figures show.
Retailers led job gains with 47,000, and restaurants and bars added 38,000. All told, four low-paying sectors — retail, restaurants, temporary staffing firms and home health care — accounted for 60% of the jobs added in July, though they make up just 22% of total employment, according to an analysis by Wells Fargo. So far this year, the four sectors have accounted for 45% of the nation's 1.3 million payroll additions.
"A large portion of the jobs we're adding tend to be in low-skill occupations," says Wells Fargo senior economist Mark Vitner.
The trend appears to have improved the job prospects of less-educated Americans. Employment for high school graduates increased by nearly 400,000 in July, while payrolls for those with at least a four-year college degree fell by 256,000.
Many of the new jobs, however, are part time, especially in stores and restaurants. The number of Americans who usually work part time jumped 174,000 last month, but totals for those who usually work full time rose by just 92,000. Since March, the ranks of part-timers have swelled by 791,000 vs. 187,000 for full-timers.
These totals differ from the widely-reported 162,000 job gains because the former comes from a survey of households, while the latter comes from a separate survey of employers. The broad trend, however, appears consistent: The economy has been creating an outsize number of part-time jobs the past several months.
Making the disparity even more glaring is that there are 116.1 million full-time workers in the USA and just 28.2 million part-time ones.
One possible reason for the recent trend is the new health care law. It requires businesses with at least 50 employees to provide health insurance to staffers who work at least 30 hours, prompting some employers to cut employees' hours or hire more part-timers instead of adding full-time positions.
Recently, however, the Obama administration delayed the effective date of the mandate by a year to January 2015. That change could prompt some businesses to add more full-time workers in the near term, says Jim O'Sullivan, chief U.S. economist of High Frequency Economics.
O'Sullivan, however, is not convinced that part-time, low-wage jobs are driving the nation's employment growth. Average hourly earnings most of this year have been rising about 2% at an annual rate, notwithstanding a slight dip in July.
That's consistent with the rest of the 4-year-old recovery. If low-wage jobs were growing much faster than other positions, they should be pulling down average wage growth, O'Sullivan says.
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