The Economy Is So Good, The President’s Party Lost The Senate

November 12, 2014 0 Comments

Another consecutive month of job growth in the economy. A great rebound from losing 800,000 jobs a month before the recession ended. That, at least, is the talking point that our elected officials loves to remind us about. So how come our elected officials, particularly Democrats, couldn’t stay in office with a winning message like that? Aren’t happy days here again?

Well, it is true that the economy has consistently added jobs month after month. It is also true that the economy has also recovered the job losses in the aftermath of the previous recession. However, there is an old saying that I think rings true to this very day: Quality over Quantity.

One piece of information that is included in the monthly Employment Situation Report released by the Bureau Labor of Statistics are the Average Hourly and Weekly Earnings Report. Private Nonfarm payrolls increased by only 3 cents from the previous month of October to $24.57, while hourly wages of private production and nonsupervisory employees increased 4 cents to $20.70. Overall, average hourly wages  have increased 2%.

What does this all mean? The growth of average hourly earnings can give you an idea of the types of jobs being created in the economy (or jobs the economy is losing). The basic idea, in theory, is if the number of employees in the economy remains the same, then average hourly earnings should increase at a steady rate (or fall, depending upon the growth of the economy). It is generally not a good thing if incomes are relatively stagnant (like they appear to be now) and employment rises. Increasing wages, along with employment, indicates that workers are leaving lower paying jobs to take advantage of higher paying ones. However, if wages are not growing at the same rate as employment, it can indicate that workers are filling the best positions they can find. This seems to be the case, considering that 52,000 were created in Leisure and Hospitality Industry, while 42,000 of those jobs were created in the Food and Accommodation sector.

Overall, the economy seems to be creating more of the jobs we don’t need (retail, fast food, professional business services, etc), while we are creating less of the jobs the economy needs for long term sustainable growth.

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