just for personal read..I think this analysis of job market is incredibly important..also if wages have 2/3 weight in production costs..inflation picture according to the implications of this article aren't there.. lp-llc.com
By Anthony Chan, Ph. D.,
Managing Director and Chief Economist,
Banc One Investment Advisors
It is no secret that most of the jobs that have been gained in the current expansion have
been largely concentrated in the service sector. Specifically, the service sector added over
10 million jobs during this expansion while the manufacturing sector has gained only 71
thousand jobs! During the latest month the average hourly earnings data revealed that
workers in the service sector earned only $13.18 per hour while workers in the
manufacturing sector earned $11.68 per hour. A much more detailed analysis also
demonstrated that the business services component added 3.755 million jobs while Health
and Eating and Drinking Establishments and Special Trade Contractors added 1.889,
1.383 and 1.03 million, new jobs (during the current expansion), respectively. Another
category that gained a large number of jobs included State and Local governments which
gained 1.953 million jobs. In contrast, when we sorted the categories by relative percentage
gains (during the current expansion), we found the following rankings in descending order of
importance: Business Services (+74.4%), Amusement Park Recreations (+56.7%),
Agricultural Services ( +53.2%), Social Services (48.6%) and Engineering and
Management (+38.2%).
In contrast, we also found that the five lowest wage earning groups include: Eating and
Drinking establishments, Apparel and Accessories, General Merchandise Stores, Food
Stores and Hotels. In other words, we find that many of the categories that experienced the
greatest gains in net job creations have also been listed in many of the lowest paid
categories. As an example, we note that the Eating and Drinking establishment group was
the fourth highest gainer of new jobs during the expansion while also generating the largest
decline in average hourly earnings of any other major group. Moreover, the categories of
Special Trade Contractors and Amusement Park Recreations were also among the list of
large job gainers while simultaneously coming in the top five list of weakest wage gains.
Given these results, it is no wonder that average hourly earnings haven't risen to menacing
levels during the current expansion.
On the job loss front, our results find that the list was led by: Nondurable Goods (-281
million), Federal Government (-243 million), Oil and Gas (-107), Coal Mining (-52 million)
and Apparel (-51 million). Sorting out this same category by percentage decliners we find
that the list remained quite similar. The largest percentage decliner was coal mining
(-37.1%), followed by the following: Oil and Gas Extraction (-26.4%), Metal Mining
(-12.3%), Federal Government (-8.2%) and Apparel and Accessories (-4.4%). Once
again, our results revealed that the loss of jobs helped moderate the tone of the average
hourly earnings data because Coal Mining ($19.40) was the category with the highest
average hourly earnings while Metal Mining ($18.22) generated the fourth highest average
hourly earnings on the list of group categories. <p>
These results clearly reveal demonstrate that economy-wide wage pressures remain
quiescent partly as a result of an economy that has generated a large number of jobs in
categories that earn lower wages while eliminating a large number of jobs that have
traditionally earned relatively higher wages. Specifically, it is no secret that much of the
manufacturing sector (with average hourly earnings of $13.68) has still managed to increase
production despite very weak job gains which has translated into large gains in productivity
which have more than offset the wage increases that have recorded in this sector.
ANTHONY CHAN CHIEF ECONOMIST
(614-213-1832) BANC ONE INVESTMENT ADVISORS
The information herein is based on sources which Banc One believes to be reliable
but we cannot warrant its accuracy or completeness. Such information is subject to
change and is not intended to influence your investment decisions. |
