Good jobs at good wages
Other editors say
The latest data shows more new jobs are higher-paying than lower-paying
The Wall Street Journal
Several months of growth have blown away most of the Chicken Little stories about a jobless recovery, but one doubt has lingered. Many Americans believe that service-sector offshoring means that the number of high-paying jobs is flat, while companies are creating more menial positions.
Well, even that myth has now been shattered. A new paper from the Chicago Federal Reserve Bank analyzes government employment numbers and finds that growth in jobs paying more than the mean now outstrips the creation of jobs on the bottom end of the bell curve. Moreover, the timing of this shift is in line with the pattern of past economic expansions.
The big problem in analysis is that the data you have to work with are aggregated into broad categories. Partisans can generalize the data to get the answer they're looking for. For instance, when the Chicago Fed looked only at the 14 supersectors of the economy, 72% of the employment growth in the first half of the year was found in those areas with above-average wages, even though these account for only 65% of total employment. But when the Fed economists separated these into subsectors, only 41% of the growth was in job categories paying more than the mean.
Yet using either method, the Fed economists found that the trend line is clear: The U.S. employment market is now in positive territory, creating more higher paying jobs. Moreover, it is entirely normal for this to happen a couple years after the end of a recession, as it did following the previous four recessions.
The CEO of a major retailer told us recently that he scoffs at the idea that good jobs are harder to find. How can he be so sure? First, because average wages are rising. Government data show that in the year leading up to last July, wage and salary income grew 4.4%, while personal income was up 4.9%. Not only that, the median weekly wage also rose ' as of the second quarter, it outstripped inflation over the previous year by 1.1 percentage points.
No doubt this new evidence won't quiet the worriers. John Kerry is now arguing that the job market has squeezed the middle class. Others fret that the American consumer has kept the economy going by taking on inordinate debt. But again, there is no evidence to support these claims. As economist David Malpass of Bear Stearns replies, Spending has been resilient due to job growth, the [5.4%] unemployment rate, income growth and high levels of household savings and net worth. Yesterday the Fed announced that household net worth hit another new high in the second quarter, while debt growth has begun to slow.
All of this good news won't please protectionists who have staked their reputations, or their Nielsen ratings, on the proposition that trade with Bangalore is driving Americans into poverty. The business cycle is still the best explanation for temporary setbacks in job creation. Meanwhile, trade continues to increase the buying power of American consumers. The one surprising thing about this expansion is how vigorous it remains given the head winds of terrorism and high oil prices. That shows the confidence of millions of workers, consumers and entrepreneurs that, despite temporary setbacks, the economy is on its usual path to future prosperity.