US Job Growth Slowed in February, but Average Earnings Rose

US Job Growth Slowed in February, but Average Earnings Rose

The US economy added only 20,000 jobs last month, according to the Labor Department’s latest jobs report, marking a sharp slowdown from a streak of monthly gains in the hundreds of thousands. The unemployment rate, however, fell from 4.0 to 3.8 percent, while the number of people employed part time for economic reasons decreased by 837,000 to 4.3 million, following a sharp increase in January attributed to the federal government shutdown that month. The return of furloughed federal employees also contributed to the decline in the overall unemployment rate.

The number of new jobs fell far short of economists’ predictions, which were in the range of 170,000-180,000. Employment in fields like professional services and health care continued to increase apace with recent trends, but the construction sector cut 31,000 jobs and manufacturing added only 4,000. Employment in other industries like retail, leisure, and hospitality stagnated.

The contrast with other recent months is even more striking as the numbers of new jobs created in December and January were both revised upward slightly, to 227,000 and 311,000 respectively. This sudden swing from robust to lackluster job growth is difficult to interpret as it may signal a slowdown be just a blip in the data, the New York Times notes:

January’s payroll gains were exhilarating. February’s numbers were disappointing. Together they offer a potent reminder that each monthly employment report from the Labor Department captures just a moment in time. Longer-term trends are what matter, and the streak of job growth continues to set records. …

Still, as Carl Tannenbaum, chief economist of Northern Trust in Chicago, said: “This is a disappointing report. I don’t think there’s any way to sugarcoat it.” Rising wage growth is good for workers, but combined with soft payroll growth, he said, “it’s a signal we need to be cautious with the U.S. economic outlook.”

Read more

In Construction Worker Shortage, US Cities See Opportunity for Struggling Residents

In Construction Worker Shortage, US Cities See Opportunity for Struggling Residents

With the tightest labor market in decades, US employers in most industries are having a hard time filling roles. One sector that is especially hurting for workers is construction, where the labor shortage coincides with growing demand for housing and commercial development in American cities large and small. There’s a lot of work to be done, but not enough people to do it.

At the same time as unemployment is historically low, however, many Americans are underemployed, not looking for work, or lacking in marketable job skills. Some cities are now looking at the construction worker shortage as a chance to help improve the skills, incomes, and employability of underserved populations. The New York Times took a look at what these cities are doing in a recent feature:

Facing a tight labor pool, developers, public officials and community organizations are using commercial projects to provide residents with careers in construction. Together, they’re making an effort to recruit men and women from impoverished neighborhoods or challenged populations, such as former prison inmates. In booming markets like San Francisco, Denver and Miami, where gentrification is squeezing affordable housing, demand for these types of programs is growing.

The training programs are also occurring in smaller markets. In Milwaukee, for example, Gorman & Company, an apartment developer, has teamed up with city, state and community agencies to give former inmates on-the-job training restoring dilapidated, tax-foreclosed homes, which are then rented to low-income earners.

Read more

New Studies Challenge Conventional Wisdom on Gig Economy, Skills Gap

New Studies Challenge Conventional Wisdom on Gig Economy, Skills Gap

Over the past decade, particularly in the US, there has been considerable debate over whether the labor market trends we were seeing represented fundamental shifts in the economy or business-cycle responses to the Great Recession that followed the 2008 financial crisis and the long, slow recovery. In new studies, two of these trends—the skills gap and the gig economy—are reconsidered in light of new data, with researchers finding that phenomena they once thought were secular may actually have just been products of the recession after all.

Economists Alan Krueger and Lawrence Katz made headlines in 2016 when they released the results of a survey they had conducted the year before, which found a major jump in the number of Americans making a living in “alternative work” arrangements (i.e., not in regular, full-time employment), though gig economy platforms like Uber made up a small fraction of this contingent labor market. At the time, Krueger and Katz found that around 16 percent of the American workforce were engaged in this type of work, compared to 10 percent in 2005. Follow-up work indicated that alternative work accounted for almost all of the jobs created since 2005.

Now, the leading economists of the gig economy say their initial study overestimated its impact, the Wall Street Journal reported this week. In a new paper, Krueger and Katz look at new evidence and conclude that their 2015 survey overstated the size of the contingent workforce because of a weak labor market and the impact of the recession. Many of the alternative jobs they counted were stopgap jobs people took to make ends meet while they were unable to find full-time work. Once the economy and their job prospects improved, these gig workers returned to more traditional employment. The vast difference in the health of the US economy between 2005 and 2015 skewed the data.

Accordingly, the economists now revise their estimate of the growth of alternative work during that period to a 1 or 2 percentage-point increase, not 5. This brings their findings more in line with other recent studies that have painted more modest pictures of the gig economy—including the Bureau of Labor Statistics’ 2017 Contingent Worker Supplement survey, which claimed the alternative workforce had actually shrunk since the last time the survey was conducted in 2005. At the same time, Krueger and Katz argue in their new paper that the surveys used to measure alternative work arrangements, including those conducted by the Labor Department, are seriously flawed (the huge gap in the BLS data due to the dozen years when the survey wasn’t conducted is part of the problem).

Read more

US Job Market Finishes 2018 Strong, but Talent Challenges Remain

US Job Market Finishes 2018 Strong, but Talent Challenges Remain

The US jobs numbers for December, released by the Bureau of Labor Statistics on Friday, exceeded expectations by a wide margin with the economy adding 312,000 jobs last month, while figures from October and November were revised upward by a combined total of 58,000. It was the best month of job growth since February 2018, when 324,000 jobs were created. Economists surveyed by Dow Jones had forecast just around 176,000 new jobs, according to CNBC.

The unemployment rate increased slightly from 3.7 to 3.9 percent in December, but for a good reason: not because workers lost their jobs, but rather because 419,000 new job seekers entered the labor force. The unemployment rate has fallen from 4.1 percent since December 2017, while the workforce expanded by nearly 2.6 million people. With the final report for the year, the US added an average of 220,000 jobs a month in 2018. Wages also grew in December by 0.4 percent over the previous month and 3.2 percent over the previous year, tying with October for the best year-over-year increase since April 2009 and indicating that the tight labor market is finally leading to higher pay for US employees.

“It appears that higher wages are the reason why people are returning to the active labor force in large numbers,” Paul Ashworth, chief US Economist with Capital Economics, commented to CNN, adding that wage growth might spook investors by suggesting that the Federal Reserve would proceed with its planned schedule of interest rate hikes this year. Ashworth added in a note reported by CNBC that the big jump in jobs “would seem to make a mockery of market fears of an impending recession,” while Jim Baird, chief investment officer for Plante Moran Financial Advisors, told the network: “Employers, it would seem, didn’t get the memo from Mr. Market that it’s time to tighten their belts.”

Nonetheless, the robust jobs report comes amid market jitters over the possibility of an overheated economy, missed earnings projections from some major US companies, and concerns about the domestic impact of President Donald Trump’s trade policies toward China. In remarks after the report was released on Friday, Fed Chairman Jerome Powell said the central bank was prepared to adjust monetary policy in response to changing economic conditions, meaning it could ease up on raising interest rates if the economy shows signs of trouble. Powell described the jobs report as encouraging, saying the rise in wages “does not raise concerns about too-high inflation” and would not prompt the Fed to accelerate rate increases, the New York Times reported.

Read more

For Retailers, Attracting Holiday Staff Means More than Just Raising Pay

For Retailers, Attracting Holiday Staff Means More than Just Raising Pay

Facing one of the tightest labor markets in living memory, US retailers and other companies staffing up for the holiday season have had to get creative about finding and attracting the extra workers they need for the seasonal rush. Some retail chains started hiring for the winter holidays all the way back in the early summer, raised entry-level wages for store employees, and offered a variety of bonuses and perks like store discounts.

The retail sector was already feeling pressure to bump up pay, the Star-Tribune reported this week, citing a survey by the hiring platform Snag that found retailers expected wages to rise by 54 percent this year. That’s partly a product of a labor shortage, but also reflects the growth of online shopping:

As more shoppers order online and opt to have items shipped to the store or their front door, retailers’ backroom operations are changing. Mass merchants still need cashiers, salespeople and shelf stockers. But they need more people to package orders for store pickup and to work in warehouses and distribution centers, which increasingly requires more technology skills.

Target is doubling the number of staff it needs to handle digital orders. Macy’s, which is hiring about the same number as last year, will shift its mix and add 5,500 more people for its fulfillment centers. Best Buy says it, too, will bulk up on workers to package up online orders.

Labor market competition, the need to attract and retain more skilled employees, and “HR-as-PR” considerations are all coming to bear on retailers’ decisions to raise pay for their hourly employees. They are also courting hires with new benefits, including intangible benefits like flexibility, Steve Bates notes at SHRM:

Read more

Will Amazon’s Minimum Wage Hike Shake up the Labor Market?

Will Amazon’s Minimum Wage Hike Shake up the Labor Market?

On Tuesday, October 2, Amazon announced that it would raise its internal minimum hourly wage for US employees, including part-time workers and those hired through temporary agencies, to $15 an hour. This includes workers at the company’s warehouses or “fulfillment centers,” as it calls them, in addition to store employees at Whole Foods, which Amazon acquired last year. The e-commerce giant also said it planned to lobby the US government to raise the federal minimum wage from its current hourly rate of $7.25, last updated in 2009, the New York Times reported:

The new wages will apply to more than 250,000 Amazon employees, including those at the grocery chain Whole Foods, as well as the more than 100,000 seasonal employees it plans to hire for the holiday season. The change will not apply to contract workers. It goes into effect on Nov. 1. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon’s chief executive, Jeff Bezos, said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”

The move came amid growing pressure on Amazon from the media and politicians regarding its pay practices and the work conditions of its lowest-paid employees, particularly those at its warehouses or “fulfillment centers.” Vermont Senator and former presidential candidate Bernie Sanders has been an outspoken critic of Amazon’s CEO Jeff Bezos, who is currently estimated to be the wealthiest individual in the world, citing news reports that large numbers of Amazon’s low-wage employees were dependent on public assistance. Sanders and California congressman Ro Khanna have been pushing legislation that would require companies to compensate the federal government for the cost of public assistance benefits received by their employees, including food stamps, Medicaid, and public housing.

The next day, however, Bloomberg reported that Amazon was cutting monthly bonuses and stock awards for hourly employees to help offset the costs of the minimum wage hike. Still, the company insists that these workers’ total compensation is rising:

Read more

US Employees’ Bonuses and Benefits Growing Faster than Wages

US Employees’ Bonuses and Benefits Growing Faster than Wages

The latest compensation data from the US Labor Department’s Bureau of Labor Statistics show that total compensation for US employees has increased modestly over the past year, from $35.28 per hour worked in June 2017 to $36.22 per hour worked in June 2018. Wages and salaries averaged $24.72 per hour worked and accounted for 68.3 percent of these costs, while benefits averaged $11.50 and accounted for 31.7 percent. For private sector employees, compensation has increased from $33.26 per hour worked to $34.19. Wages made up $23.78 or 69.6 percent of that figure, while the remaining $10.41 (30.4 percent) consisted of benefit costs, in which the BLS includes supplemental pay.

While the percentage ratio of wages to benefits was unchanged from June 2017, benefit costs grew at a slightly higher rate than wages year-over-year, nearly 3 percent compared to 2.7 percent. This reflects a nearly 12 percent increase in bonuses and other forms of supplemental pay, from $1.18 per hour to $1.32; supplemental pay made up 3.8 percent of the total compensation mix in June 2018, compared to 3.5 percent a year earlier. Paid leave, including vacation time, also increased slightly.

Taking a longer-term view, over the past five years, benefit costs for private-sector employees have increased by over 20 percent, from $8.64 per hour worked in June 2013; whereas wages and salaries have increased 16 percent, from $20.47 that month. Supplemental pay, by comparison, has increased 65 percent from 80¢ per hour worked in June 2013. This trajectory reflects the increasing tendency we’ve observed among employers in recent years toward variable pay schemes that reward employees for high performance with one-time bonuses rather than standard annual raises.

Read more