Quality Following Quantity in U.S. Hiring With $867 Pay

Quality may finally be following quantity in the U.S. labor market.

After the world’s largest economy restored all the jobs it lost when savaged by recession, it may now have begun to soothe concerns of policy makers and economists that hiring for positions with decent pay has been slow to rebound, according to Paul Ashworth, Toronto-based chief U.S. economist at Capital Economics Ltd.

His calculations show that the 1.3 million private-sector jobs created in the first six months of the year paid an average of $867 a week. That is just above the $843 per week that the existing 117 million private-sector workers earn.

“The upshot is that the jobs created this year have, on average, been of a slightly higher quality,” Ashworth said in a report this month.

A breakdown of the Labor Department’s data also suggests to him that mining, construction and business-services companies are increasingly stepping up hiring, which is welcome news given they traditionally pay more than the average.

Construction, for example, pays an average weekly wage of $1,041 and added 139,000 positions since the start of the year. Manufacturing pays a similar amount and its payrolls have risen by 68,000, while mining with pay of $1,041 a week boosted employment by 24,000.

Factory Workers

Factories took on the most workers in four months in June, while payrolls at private service providers climbed by the most since October 2012. An index gauging the breadth of private-industry hiring in June climbed to 64.8 from 62.9 a month earlier.

Yet, there is still some way to go. Ashworth notes the loss of 17,000 typically highly paid information jobs this year is unfortunate given they tend to pay $1,256 a week on average.

The leisure industry, whose workers earn only about $362 each week, is also responsible for a sizable share of jobs gains with 270,000 so far this year.

If the quality count continues to improve, it should fan the higher wages that Federal Reserve Chair Janet Yellen has identified as something she’d like to see before tightening monetary policy.

“We suspect that accelerating wage growth will be one of the biggest stories for the second half of this year,” said Ashworth.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Jana Randow, Patrick Henry

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