Wages stagnate, everything going up in prices, who will be able to buy your property?
For the second month in a row, a majority of the new jobs added were low-quality positions, existing below the median wage level. The lowest wage category alone accounted for nearly one-third of the new additions listed in the jobs reports from the Bureau of Labor Statistics. This is clear evidence that we are still in the grips of a low-wage recovery.
Digging deeper into the numbers, we see that food service and drinking places (the main component of the lowest wage category) accounted for the largest employment gains last month. This sector, which pays an average hourly wage of just $12.57, added nearly 42,000 positions, representing approximately 20% of all the October jobs.
Unfortunately, low-wage jobs like these do not provide enough income to boost consumer spending or encourage more borrowing, so their overall impact on the economy is negligible.
In total, 55% of the jobs added in October fell below the median wage level.
Commenting on the latest employment numbers, index creator and Dent Research co-founder Rodney Johnson said: “More than 200,000 new jobs looks good in a headline, but we cannot ignore the types of jobs that are being created. When job quality is factored in, it’s still a low-wage recovery. The jobs we’re adding do not increase overall consumer spending or borrowing, and, therefore, won’t expand the economy in a meaningful way. Each month that we see more additions below the median wage line is another month that delays a full recovery.”
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