This morning’s US payroll employment report showed more new jobs than expected in February (242,000 vs. a consensus estimate of 195,000) but lower pay (-0.1% between January and February). There’s no conundrum here: all the new jobs are coming in at the bottom of the pay spectrum. Healthcare and education added 86,000, Leisure and Hospitality (mainly fast food) added 56,000, and retailed added 55,000. Good-producing jobs were down by 15,000, despite an increase in construction.
That’s been the pattern throughout the post-2009 recovery, if that’s the right word for what we’ve seen in the US labor market.
The increase in health care employment is in part the result of natural aging of the US population, but it is also driven by government mandates starting with Obamacare. Fast food employment is an index of family deterioration: Americans grab a quick (and usually revolting) meal alone rather than dine with their families. Most of the jobs in these sectors pay the minimum wage. As better-paid jobs (for example those associated with the shale boom-and-bust) disappear, employment growth doesn’t cause improvement in pay.