Revved up employment growth offers ‘meat-on-the-bone’ jobs, but mostly more minimum wage

JUDY WOODRUFF:

Let's take a deeper dive into today's surprising good labor news.

Jobs growth revved up last month with more than 300,000 added. At this pace, the economy is on track to produce the largest number of jobs in 15 years.

One development that also caught much attention, average hourly wages rose higher than expected, the largest increase since June of last year.

Even so, earnings have grown a sluggish 2 percent in the past year.

Hari Sreenivasan has the story from our New York studios.

HARI SREENIVASAN:

I'm joined by Diane Swonk, an economist with Mesirow Financial, a financial services firm.

So, what's behind the higher number today?

DIANE SWONK, Mesirow Financial:

Well, a lot of good news.

We had actually some meat-on-the-bone jobs in things like business services. That's an area that was really hard-hit during the recession. It includes everything from accountants, technical consultants, engineers, architects. That's the good news.

We saw those meat-on-the-bone jobs. We also some manufacturing and construction jobs, off a low base, but still some jobs in those sectors. And then there was this huge hiring in retail, also in food, restaurants, all those kind of areas that are more…

HARI SREENIVASAN:

Just from the holiday season?

DIANE SWONK:

Holiday hires, but not just holiday hires; 20 percent of the retail hiring was in the auto sector to sell cars. That's not really what we tend to buy as gifts for the holiday season.

HARI SREENIVASAN:

Yes.

DIANE SWONK:

So, some of it was holiday.

But also we saw that instead of — department stores didn't hire up. And the big box retailers didn't hire up. And that's because they're showing off their online presence. So, you saw warehousing, people who package things in the back and shippers — shippers are hiring but, because last year, remember, we had some bad weather and lots of online spending.

And I was one of the those people who didn't get their Christmas present on time.

(LAUGHTER)

DIANE SWONK:

The ones you want to give — you know, it's just not good when it comes three days later.

HARI SREENIVASAN:

Right. Right.

DIANE SWONK:

And so they're trying to get that in order all year.

HARI SREENIVASAN:

So, not all jobs are created equal. Some of these jobs pay better than others. What's the quality of the jobs that we're seeing?

DIANE SWONK:

We had some really good-quality jobs, which in the last six months, we have started to see some good-quality jobs come back. That's the good news.

Some of these full-time jobs — business services used to be something — the temporary hires is what we used to talk about. These are not temporary hires. These are full-time hires and these are full-time jobs. On the other side of it, still a large majority of these jobs are minimum-wage jobs.

And also the number of people taking multiple jobs went up this month. And part of that is things like not related to the retail hiring season, but also hedging against the Affordable Care Act. They're not providing health care, but they have got to get their hours down below 30 hours. And some people who work in a restaurant work 48 hours a week, so, all of a sudden, you're splitting one job into almost two.

HARI SREENIVASAN:

So maybe more part-time work.

DIANE SWONK:

Exactly.

And we're seeing more people holding multiple jobs this month than we did last month. And that picked up. And the number people accepting part-time when they're looking full-time is still high. So, it was a step in the right direction. But we didn't land on the moon here. This was — as good as the number was, we have got a long way to go to regain what we have lost.

HARI SREENIVASAN:

OK.

Is there — we always have all these caveats when we look at these numbers, but at what point — how many months going back do we need to look and say there is something positive happening here?

DIANE SWONK:

I think this year really has been a transitional year, because we get what I call those, like I said, the meat-on-the-bone jobs, the full-time jobs that are college graduate jobs.

They're actually being filled. One of the places where we have a shortage of workers is people with five years' experience. What were people doing five years ago? They weren't getting hired. And so we don't have people with five years' experience. So, in many cases, you're seeing someone who has a lot of experience being brought in, maybe at lower pay, but better than no pay, or someone with very little experience being paid low, but now being trained.

And that puts money into training. There is some mismatch and things like that. But we're starting to see — this year, we did start to finally see some of those full-time jobs come back. Not enough. We still are far too reliant on part-time. We still are far too reliant on minimum-wage jobs.

And quality matters as much as quantity when you're generating jobs because you really need to see wages pick up. The majority of households are still trying to regain ground lost to the great recession. And that's something we have to keep into perspective, context.

This might be the best year of job generation since 1999, but 1999 was a year we were running out of people to employ.

HARI SREENIVASAN:

Right. Right.

DIANE SWONK:

That isn't not the economy we're in today.

HARI SREENIVASAN:

And so when you talk about that minimum-wage job or when you talk about those low hourly wages, they're not even keeping up with what really has to happen for inflation, right?

DIANE SWONK:

Some of them are not, absolutely not.

Some of them will see minimum wages go up. Some 25 states have been going up in — half the states in 2015. In terms of what happens, if you're working two jobs, it's a lot harder to manage working two jobs instead of one job. So even if your minimum wage goes up, if you have these other issues holding hours down, again still difficult.

We really need to see. These were nice broad-based gains. That's good. We need to see a lot more of those, and an extended period of time of wages, not 2 percent gains from a year ago, but 3 percent-plus to really start regaining ground lost. And that's the key. And I think we might be able to get there, start getting there in 2015, but we still have got a long way to go.

HARI SREENIVASAN:

All right, Diane Swonk with Mesirow Financial, thanks so much.

DIANE SWONK:

Thank you.