January 5, 2007 (Jobs Byte)
Wages Continue to Trend Upwards
January 5, 2007
By Heather Boushey
Growth in hours indicates falling productivity for the fourth quarter of 2006.
The establishment survey showed the economy adding 167,000
jobs in December, on top of upward revisions of 36,000 for October and
November. Over the past three months, the average job growth was 136,000. Gains
in employment continue to trend below the recovery of the 1990s, when the
economy added an average of 224,000 each month.
Job gains were found in the service-producing industries.
Transportation added 15,200 jobs (above its usual monthly average gain of
9,000), information added 12,000 jobs, and professional and business services
added 50,000 jobs in December.
Job losses were spread across the goods-producing sector and
manufacturing lost another 12,000 jobs in December, for a total of 72,000 for
the past year. There was also a notable decline in employment in residential
specialty trade contractors, who lost 10,000 jobs in December and 103,000 jobs
over the past year. Other sectors with losses include transportation equipment
(5,000 jobs), motor vehicles and parts (5,000 jobs), textile mills (2,000
jobs), retail trade (9,000 jobs), and building material and garden supply
stores (8,000 jobs).
Hours grew at a 1.9 percent annual rate over the quarter and
the index of aggregate weekly hours rose from 105.7 up to 105.9 over the past
month. This is evidence of slowing productivity: if the Gross Domestic Product
is growing at 2.5 percent, then productivity will be just 0.6 percent for the
While the establishment survey shows job losses in a number
of key sectors, the household survey shows signs of a relatively tight labor
market. The employment rate—the share of people at work—and the unemployment
rate both were statistically unchanged in December, but continued to move
towards a tightening labor market.
The employment rate was 63.4 in December and has risen 0.6
percentage points over the past year. However, the employment rate remains 1.3
percentage points below its peak in April 2000.
Wage growth has been outpacing inflation since September
2006. The annualized rate of nominal wage growth over the quarter was 3.9
percent. Inflation-adjusted hourly wages were flat during 2002 and 2003 and
fell from 2004 through September 2006.
The number of discouraged workers is down sharply from this
time last year. In December 2006, there were 274,000 workers who reported
wanting a job, but not searching, while in December 2005, there were 451,000
such workers. The drop was sharper for women: there were 104,000 fewer
discouraged female workers in December 2006, compared to a year ago, while
there were 72,000 fewer discouraged male workers.
The length of time workers are spending unemployed is also
falling and the share of the unemployed who are “long-term unemployed” (more
than six months without a job) fell to 16.0 percent in December. However, the
number of workers part-time for economic reasons is up by 49,000 from last month
and by 99,000 compared to a year ago.
Lower unemployment is helping the least skilled to find
jobs. Over the past year, less-educated workers have seen gains in employment.
For workers without a high-school degree, the unemployment rate fell from 7.3
to 6.6 percent from December 2005 to December 2006, while falling from 2.2 to
1.9 for those with a college degree. The employment rate of workers without a
high-school degree has risen by 1.7 percentage points over the past year, from
42.0 to 43.7 percent, while rising by 0.1 percentage point for those with a
college degree, from 76.5 to 76.6.
There continues to be evidence that women were not
voluntarily “opting out” of employment in the early 2000s, but that the weak
labor market made it difficult for them to find jobs. The pace of employment
growth has been greater for married women, compared to married men: over the
past year, married women have gained 415,000 jobs, while married men gained