American Job Quality Takes Another Hit In Latest Unemployment Data

January 08, 2021

Job quality in the U.S. remains tepid, the latest Private Sector Job Quality Index data showed on Friday. Following the release of today’s Employment Situation Report for December 2020 by the U.S. Bureau of Labor Statistics (BLS), the U.S. Private Sector Job Quality Index (JQI)® slipped 0.91% to 81.24. The decline is due to a higher proportion relative to the prior month of U.S. production and non-supervisory (P&NS) jobs that pay less than the mean weekly income of all P&NS jobs. In short, more lower-paying jobs are being created, or returning to the workforce, as opposed to higher-paying manufacturing and professional services jobs.

“The incoming Biden administration takes office this month. As his administration addresses the pandemic crisis, it should bear in mind that restoring the health of our manufacturing sector is the best way to restore prosperity to millions of middle class and struggling Americans,” says Jeff Ferry, chief economist at the Coalition for a Prosperous America, and a co-creator of the JQI. https://www.prosperousamerica.org/jqi

The JQI assesses job quality in the United States by measuring higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs.  The goal is to see more higher-paying jobs over time.

This month’s decline in the JQI corresponds with the 140,000 jobs lost in December due to a fresh round of lockdowns in California as well as in smaller states like Rhode Island. The JQI and the monthly employment figures from the BLS tend to move in opposite directions because low-quality (ie low wage/low hour) jobs are highly volatile and reflect the closures and re-openings prevalent during the COVID pandemic. 

For a nonsupervisory worker, which refers to workers who do not hold management positions, the average weekly earnings in December were $954.86, 16% more than the corresponding worker’s income in the service sector, which was $823.02 per week.

For nonsupervisory workers, manufacturing jobs pay better than service sector jobs. And at times of a pandemic, manufacturing jobs are more secure, helping increase those weekly earning figures.

The  JQI is a near-real-time analytical tool for policymakers, researchers, and financial market participants with relevance to a variety of trends in the economy at large.  It is designed to read “job quality” as meaning the weekly dollar-income a job generates for an employee. The JQI analyzes a representative sample of the economy using production and non-supervisory job data from 180 different industry groups spanning across all 20 super-sectors as segregated by the BLS.

As of December, the BLS says there are roughly 10.7 million people unemployed. Some 7.3 million told BLS that they want a job, even though they are not in the labor force --, totaling 18 million Americans who would like jobs today but cannot find them.

The good news is that manufacturing employment rose by 38,000 in December, reflecting the reopening and catching up currently going on in manufacturing. Earlier this week, the ISM survey said its manufacturing index rose to 60.7 in December, the highest level in over two years, further evidence that manufacturing is coming back strongly from the lockdowns. Still, total manufacturing employment in December was 12.3 million and that is down around 557,000 from the level of Dec 2019. Considering these are better-paying jobs than those employed at local retail shops and restaurants, should those lower-quality jobs outpace the higher-skilled manufacturing jobs in the months ahead, the JQI will fall further as lower pay outpaces higher pay scales.

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