Another Look At Those Job Numbers

The Bureau of Labor Statistics says more of the recent new ones were high-paying

Sure, America is once again creating jobs. But are most of them of the burger-flipping variety, with below-average pay? Many economists are concluding just that. "America's Job-Quality Trap" is the headline on a recent research report by Morgan Stanley (MWD ) Chief Economist Stephen S. Roach. "Are the New Jobs Good Jobs or Snow Jobs?" asks another study, this one by Merrill Lynch & Co. (MER ). Job quality is also emerging as an issue in the Presidential race. On July 13, the campaign of Democratic contender Senator John Kerry argued that 90% of the jobs created during the Bush administration have been in low-wage industries.

But new evidence shows that the pessimists may not have a case. According to data prepared by the Bureau of Labor Statistics, which have not been widely distributed, growth in high-wage jobs has actually been quite healthy. The figures show that the U.S. economy created more high-paying jobs than low-paying jobs in the year that ended in June. That's a sign that the economy is better for workers than commonly believed. It also could be good news for the Bush-Cheney campaign, which played up the numbers in answering Kerry's attack.

Why have many economists drawn such gloomy conclusions? It's largely because they've focused on employment changes by industry. Looked at that way, the signs are troubling, since job growth has been stronger in low-paying industries like retail than in high-paying industries like financial services. But even low-paying sectors boast some high-paying jobs -- and if more of those jobs are being added, overall pay growth can be healthy.

That appears to be exactly what has happened, according to the new data from the non-partisan BLS. The bureau divides up all workers into 11 occupations, ranging from management to production. At the same time, it assigns every job to one of 14 industries, meaning that the U.S. workforce can be sliced into a total of 154 occupation/industry groups, such as "management occupations in the leisure and hotel industry."

In response to a request about a month ago from the White House Office of Management & Budget, BLS supplied the median 2003 weekly wages and salaries for workers in each of the 154 groups. The median manager in manufacturing makes $1,125 a week, for example, vs. just $649 for the median manager in agriculture. The BLS has since provided the numbers -- without analysis -- to other agencies and some outside organizations and news media, including BusinessWeek.


The new data make it possible to see pay trends within the workforce with unprecedented accuracy. According to BusinessWeek's analysis, 48% of American workers belong to occupation/industry groups where the median pay is $559 a week or more. Yet employment growth in those higher-paying groups accounted for well over half of total job growth during the past year. Average monthly employment in the higher-paying groups was 744,000 higher in the 12 months ended in June, 2004, than in the previous 12-month period. By contrast, only 408,000 jobs were added in groups whose median pay was $553 a week or less, even though they account for 52% of total jobs. (No groups have median pay between $553 and $559 a week.)

The gains in job quality come from a variety of sources. For instance, above-average growth occurred in professional occupations in wholesale trade, with median weekly pay of $908, as well as in production occupations in mining, at $665 a week.

Jobs pessimists note that inflation-adjusted pay has fallen in recent months. But that's because of an uptick in inflation, not a deterioration of job quality. Also, Morgan Stanley's Roach and others have pointed out that part-time jobs account for the bulk of all jobs created since February. Still, the overall share of part-time jobs is no higher than during the late-1990s boom, at around 18%. And most people take part-time jobs because they prefer them. Only 3.2% of jobholders were working part-time last month for what they called economic reasons.

Are there problems with the economy? Sure. But based on the new BLS data, it's hard to argue that job quality is one of them.

By Peter Coy in New York

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