Economist Stephen Roach of Morgan Stanley looks at the quality of newly created jobs in the US: America’s Job-Quality Trap
An unprecedented hiring shortfall has crimped the economy’s income generating capacity as never before.
…While there has been some improvement on the hiring front in recent months, the quality of such job creation has been decidedly subpar.
…from the trough of the last recession in November 2001 through June 2004, private nonfarm payrolls have now risen a paltry 0.2%. This stands in sharp contrast to the nearly 7.5% increase recorded, on average, over the same 31-month interval of the six preceding recoveries.
[The detailed industry breakdown of the data shows,] …The contribution of lower-end jobs (44%) was about 50% greater than that of higher-end jobs (29%). In my view, that qualifies as a decidedly low-quality improvement in the US labor market.
An even more dramatic picture of the quality of recent job growth emerges from the survey of households. … the count of nonfarm persons at work part time …increased by 495,000 over the February to June 2004 interval. That amounts to an astonishing 97% of the cumulative increase of 509,000 in total nonagricultural employment
On … basis [of the occupational breakdown data], it turns out that fully 81% of total job growth over the past year was concentrated in low-end occupations.
.. low-quality job creation poses a serious risk to sustained economic recovery. And, of course, in this political season, any legitimacy to perceptions of worker angst could easily become one of the biggest issues in the upcoming US presidential campaign.
The Economic Policy Institutes Job Watch data show that the unemployment rate, when calculated compareable to European numbers, is now at 9.6%.
Roach closes his piece with this question:
“What are we going to do about it?”