8-19-06, 9:10 am
Real weekly earnings declined in ten of the past 12 months. With inflation still rising and unemployment edging up once again, there will be no improvement in real wages through the end of the year.
The modest upturn in job growth that occurred in the second half of 2005 ended abruptly this year.
Job growth hit 200,000 in February – a sufficient level to absorb new entrants and a small number of the unemployed. But since then, job growth has averaged only 119,000 per month, well under what is needed to ease joblessness and keep any upward pressure on wages.
Unemployment is rising nationwide and in most major urban labor markets. From Miami to San Francisco, large cities have lost most of the ground they gained in the first quarter of 2006, with unemployment rates back up to the same levels as a year ago.
In many large labor markets, the unemployment rate jumped by half a percentage point or more from June to July 2006.
The number of mass layoffs, which dropped below 1,000 for the first quarter of 2006, rose to 1,213 in the second quarter as GDP growth slowed and companies in several sectors made substantial workforce cuts.
A new study from the Bureau of Labor Statistics clearly demonstrates that the recession ended in November 2001, but employment did not recover to its pre-recession level until early 2005.
That recovery was short-lived, however, with job growth sputtering at the end of 2005 and then declining sharply in 2006.
The BLS study also found that the average workweek remains shorter than it was at the start of the 2001 recession and earnings have not kept pace with inflation.
The job “recovery” from the 2001 recession has been atypical. From 1969-1981, the length of employment downturns averaged nine months from the peak to the trough, and then took an average of 16 months from the previous peak to recover to pre-recession levels, according to the BLS.
With the 2001 recession, however, employment declined for 30 months after the start of the 2001 recession, and took 48 months from the February 2001 peak to recover.
Some industries never regained the jobs they lost. Employment in manufacturing, transportation and the wholesale trades is still below 2001 levels.
The information industry, which lost a larger percentage of jobs in the recession than any industry except manufacturing, is still down by more than 650,000 jobs.
Employment in IT will drop again as more companies move more IT infrastructure jobs offshore.
A new report from McKinsey Consulting shows that the number of offshore vendors prepared to handle infrastructure work has tripled in the past two years and 40 percent to 50 percent of these positions in the U.S. can now be moved abroad.
The jobs lost in IT, along with the jobs lost in manufacturing, carried above-average wages and benefits.
Many of the industries that have recovered fully since the recession, such as the leisure and hospitality industry and retail trade, are lower-wage industries, adding to the overall downward trend in wages since the recession.
The BLS study also confirms that real average hourly earnings have declined since November 2001 in six out of 13 industries. Even in the leisure and retail industries, where employment fully recovered, real earnings have declined.
Overall, earnings in the lower-paying industries have been more adversely affected than the high-paying industries. Some industries have seen real earnings decline by 2.5 percent or more.
With higher unemployment and inflation on the horizon and the number of lower-wage jobs growing faster than higher-wage jobs, pushing a federal minimum wage increase through Congress is even more critical.
From Labor Research Association
