Jobs Created, 12 months thru Jan 2008

The economy created 800,000 new, mostly better-paying jobs in the 12 months ending January 2008.  The unemployment rate was 4.9% (down from 5.0% last month), and the labor force participation rate ticked up a notch to 66.1%. 

Not the same robust economy we've experienced, but certainly not doomsday either. 

For most people, it's good news that the job mix is continuing to shift toward higher-paying jobs.  The 655,000 jobs that disappeared averaged $18.99/hr; but 992,000 (of the 1,450,000) new jobs created averaged $19.57/hr.  [Strangely, it's not good news to all people, however.] 

Here's the summary chart; click to enlarge:

And here's the detailed chart; note the big hit in construction jobs.  Click to enlarge:

Lastly, here's the trend chart, showing the slowdown in job creation rate, and the almost indiscernible uptick in the labor force participation rate.  Click to enlarge.

============
End note -- Excel bug follow-up:
No updates from Microsoft to fix Excel 2008 for Mac yet.  Got an old XP machine out of the closet to get Excel up and running again; keeping XP isolated from the internet, and swapping the resulting files to Mac using a thumb drive.  Quickest fix available, but what a pain. 

Comments

[markg]

Steve,
I tend to agree with the majority of your work. Your graphical representation of the jobs and wage gain vs loss is 100% accurate, but slightly skewed due to your grouping method. If you grouped all the jobs that paid less together, the graph would show the majority of new jobs paid less, while only a handfull of new jobs paid more. What you did is take the one group with the most gains (education and health) but a slightly lower wage and averaging with a small number but much higher wage groups, snd came up with a large number with slightly higher average. Like I said, 100% accurate. Could you explain your reason for grouping in such a manner.

[Dave]

Agree with Markg, the only reason it looks good is because Steve grouped together the higher paying jobs in a way that 991k > 654k and has a higher avg wage. Then there is this much lower wage figure of 11.46 that we are what? supposed to ignore?

I too generally agree with Steve (very much so on pro-growth debate instead of debt/fear mongering debate), but I don’t agree this is the accurate way to view these numbers.

Jobs lost
654,600 @ 18.99 /hr

Jobs gained
1,454,900 @ 16.99 /hr

The average wage of the 800,300 jobs gained was 16.99 /hr, not 19.57. The 11.46 /hr jobs drag down the average, and have to be considered.

Weighted avg of the 2 job figures Steve provides

991k / 1454k = 68%
463k / 1454k = 32%

(68% * 18.99) + (32% * 11.46) = 16.99
(note small rounding error in the percents, I did it in excel so its accurate to the penny, but didnt type it all out)

Even (correctly) overweighting the higher paying 19.57 jobs, it doesn’t beat the 18.99 figure. That 11 dollar figure just kills the average, and has to be considered.

Like it or not, the net increase of 800,300 jobs was at an average of 16.99 /hr

[Steve]

markg:

The method is relatively simple. First I apply the average wage rates from the less-detailed table B-3 to each detailed category in table B-1. Then I record the range and the weighted average wage rates for the B-1 categories that lost jobs. (Weighted by total hours worked.) Then I separate the remaining categories (those that gained jobs) into two groups: those with a wage rate that falls inside (or above) the range for the losers, and those that don't. That process yields the three bars in the summary chart. Everything can be derived from the more-detailed chart, though.

I'm open to suggestions for improving that simple algorithm. Let me know.

[Steve]

If anyone would like to see the calculation and results table, send me an email. I'll put it into a plain text table and send it to you.

Running to an appointment now; look for it later tonight.

[Grodge]

How does the decreased value of those dollars in our paycheck factor in?

[Steve]

Grodge:

Have you been reading Ron Paul's website? I've noticed that his monetary argument usually focuses on only one of the two sides of the income-and-outgo flow.

Anyway, inflation is not factored into the 12-month wage comparison. If the BLS provides that conversion, I'm not aware of it. Others have said that wages are beating inflation, but I haven't had the time to look for a quantification of that.

[mark]

Fair enough Steve, I understand your method. I have never been one that liked "averages". Just looking at your income gains graph illustrates a point. A few small goups with high numbers can bring the total average up. And within a group a few individuals with high numbers can bring that group average up. Your graph does drive home one important point; IF income gains were distributed evenly, the "average" American WOULD be doing much better. The question remains: how evenly are the gains distributed (or should they be distributed evenly)?

[Mike H]

I don't understand your points Markg and Dave. Steve's point is that there were more jobs created at a higher wage than the ones that were lost, that means there are more people in jobs that make more money than the people that lost them. On top of that, there were a number of lower paying jobs added that weren't there before. No matter which way you look at it things are improving. More people are making more money. The average of all the jobs together is irrelevant.

[mark]

Mike H
An example may help convey my point. Five workers making $20/hr lose their jobs. A new start-up company hires them at $18/hr and also hires a manager making $50/hr. The economy added one new job with the 6 jobs now averaging $23.33/hr. Compared to the 5 old jobs that averaged $20/hr. Is everyone better off? Sure looks that way; 6 jobs averaging $23.33 is better than 5 jobs averaging $20. Just don't ask the five workers how they are doing.

[Joe C.]

They are MUCH better off - 5 jobs at $18/hr. is better than 0 jobs at $20/hr.

[Steverino]

"He detests Lou Dobbs who correctly points out that America is losing goods-producing jobs @ $18.88 per hour ($755 per week) and gaining service-producing jobs @$17.53 per hour ($559 per week)"

Something's wrong with your math there, curmudgeon. $17.53 per hour is a weekly rate of $701. Wondering why you felt the need to exaggerate the difference.

[JorgXMcKie]

Anyone who is trying to use 'wages' as a comparison, especially when trying to allow for inflation is either not understanding the reality of situation or being deceptive. (Sorry Steve, I'm not sure how to exclude you from this, since I *think* I know what you're trying to do.) We should be using 'total compensation' since the monetary value we receive from a job includes more than just wage or salary. What about benefits?

IF you include benefits in compensation (as opposed to wages), then inflation has been more than compensated for (on average, of course). Unless you are trying to claim that wages and benefits are not fungible.

Mark, let me make a point.

Suppose five workers lose their jobs at $20 an hour. Suppose some other firm in the US at the same time hires 7 new workers at $22 an hour. Suppose, in addition, five workers in a similar industry to the first hires five new workers at $15 an hour. Is the overall economy better or worse off? (I'm not claiming those who lost $20 an hour jobs are better, off, just the system.)

That, is scenario #1, in which 5 workers keep $20 an hour jobs but no new jobs are created better than scenario #2 in which 5 workers lose $20/hr jobs but 7 workers gain $22/hr jobs and 5 worker get $15/hr jobs? Seems pretty clear to me.

[Steve]

To all, for what it's worth:

Commenter "curmudgeonlyyours" apparently wishes to keep his identity a secret; he chose not to respond when I asked him privately for his real name and background. It looks to be a possibility that "curmudgeonlyyours" has also commented here using the nickname "blastfromthepast" and "marmico."

That's okay, it's his choice. And I, too, have made a choice. I deleted his comment, and banned him from commenting here any more. Reason: Hit-and-run smart-ass cowards like to hide behind the cloak of anonymity; at this blog, they are not welcome.