The Bureau of Labor Statistics (BLS) reported that the nation added 248,000 jobs in September and the unemployment rate dropped to 5.9%. For those who subscribe to my email update, you have seen the detail behind the headline report. For those who would like to see more detail when economic reports are released, you can subscribe to my email updates at www.watrust.com. Scroll down to the “WTB Insights” area and click on the “Subscribe” button.
Today’s blog post examines a piece of the story that was not covered in my more detailed report: the wage story behind the employment report. Part of the detail included in the BLS report is a report on the change in average hourly earnings compared to the previous month. Here is what happened to average hourly earnings for the various jobs categories ranked from highest to lowest paying jobs.
1) Mining and logging: fell ($.30) from $44.80/hr to $44.50/hr.
2) Utilities: fell ($.30) from $42.30/hr to $42.00/hr.
3) Manufacuring: unchanged at $40.90/hr.
4) Construction: fell ($.20) from $39.20/hr to $39.00/hr.
5) Wholesale trade: rose ($.10) from $38.90/hr to $39.00/hr.
6) Transportation and warehousing: rose from $38.50/hr to $38.60/hr.
7) Financials: rose ($.10) from $37.20/hr to $27.30/hr.
8) Information: unchanged at $36.80/hr.
9) Professional & Business Services: unchanged at $36.20/hr.
10) Education & Health Services: rose ($.10) from $32.80/hr to $32.90/hr.
11) Retail Trade: unchanged at $31.30/hr.
12) Leisure & Hospitality: rose ($.10) from $26.20/hr to $26.30/hr
As you can see, the four highest paying job categories saw their average hourly earnings fall or remain unchanged while the four lowest paying job categories saw their wages rise or remain unchanged. The problem is that 40% of September’s jobs growth came from the three lowest paying job categories. The combination of higher paying jobs seeing wage decreases and more jobs being created in the lower paying jobs categories compared to the previous month resulted in the total average hourly earnings declining by $.01.
The bottom line is that good progress is being made in jobs growth but better progress needs to be made in wage growth.
Steve Scranton is the Chief Investment Officer and Economist for Washington Trust Bank and is a CFA charter holder with over 30 years of investment experience with equities, tax-exempt and taxable fixed income securities. Steve actively participates on committees within the bank to help design strategies and policies related to client and bank owned investments. Steve also serves as the economist for the Bank and has been a featured speaker for both client and professional organization events throughout the Northwest.