Wages Are Rising, Though Unemployment Remains Stubborn
The recent release of the April employment numbers from the Bureau of Labor Statistics was mixed. On the surface, the news was good: Unemployment slipped slightly, to 8.1 percent. But the labor force participation rate – the rate that economists use to measure the percentage of the adult population that is employed – is at an all-time low of 63.6 percent. The decline in the U3 jobless statistic from 8.2 to 8.1 percent is mostly due to a precipitous increase in the number of people who have given up looking for work. These people have gone back to being homemakers, gone back to rack up debt in graduate school, or filed for disability.
The unemployment rate has now remained above 8 percent for 39 straight months – the longest 8+ streak for the U3 number since the Great Depression. Meanwhile, the chronic unemployment rate – the percentage of unemployed individuals who remain out of work for six months or longer, approaches a post-Great Depression high.
That’s not much of an improvement at all, for an economy supposedly in recovery.
To put things into perspective, the “recovery officially started in June, 2009. Since that time, the economy has actually shed some 355,000 jobs. Some recovery!
But unemployment is just one small data point in a very large economic picture. Are there other more encouraging signs?
Wages Poking Up in Some Markets
Well, a recent survey conducted by PayScale.com, a nationwide compensation consultancy firm, has some promising news. Their proprietary PayScale Index, which measures compensation trends in dozens of industries, is tracking a broad increase in compensation across the country.
Some key findings, from PayScale’s own analysts:
- The Puget Sound metros lead the way in wage growth. The Seattle metro saw a 3.2% growth from Q1 2011 to Q1 2012. Houston (2.7%), Philadelphia (1.8%) and St. Louis (1.7%) were the next highest.
- Houston’s growth is partially fueled by the powerful surge in wages in the Mining, Oil & Gas Exploration industry. That industry led wage growth at 4.9% from Q1 2011 to Q1 2012.
- While most industries grew in the past year, a lone industry saw a drop in wages from Q1 2011 to Q1 2012. Food Services & Accommodation is still fighting negative conditions and as a consequence wages declined 0.2%.
- Workers at larger companies saw bigger wage increases than those at small companies. Large company employees enjoyed increases of 2.5%, three times the rate experienced by small company employees.
In addition, PayScale’s 2012 Compensation Best Practices Report indicated that the percentage of companies that had decreased in size over the previous year was down to 14 percent, compared to 41 percent in 2009.
Of those companies most likely to have increased in size in 2011, information, media and communications led the way with 57 percent. Other high-growth niches include warehousing and transportation, with 55 percent reporting employment expansion in 2011.
Politics
The employment numbers are highly charged, every election year. They’ve been so ever since the Carter Administration succumbed after a single term under the onslaught of Reagan and the GOP’ weaponization of the “misery index”, a composite of the inflation and unemployment numbers for 1979, which were miserable indeed that year.
But take everything you hear about employment with a pinch of salt. The truth is not as bad as the GOP tries to make things seem (well, with unemployment, anyway. With the debt situation, it’s worse). The unemployment situation is nowhere near as good as the Obama Administration paints it, either. The truth is invariably somewhere in the middle – and difficult to measure, as employment is a notoriously lagging economic indicator.