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Home Publications Data Bytes Jobs Bytes Workers See Employment and Wage Gains in Early 2006

Workers See Employment and Wage Gains in Early 2006

February 3, 2006 (Jobs Byte)
Jobs Byte

Workers See Employment and Wage Gains in Early 2006

February 3, 2006
By Heather Boushey

After the latest revisions, job growth was exactly zero over Bush's first term in office.
Employment growth was widespread in January as the economy added 193,000 new jobs and the unemployment rate fell from 4.9 to 4.7 percent. Upward revisions to the employment survey for 2005 showed stronger growth than had been previously reported for the latter half of 2005, but weaker job growth for the first half of 2005. The revised figures show that the economy has added an average of 229,000 new jobs over the last three months.

Employment gains occurred across a wide array of industries, with significant gains in construction, education and health, leisure and hospitality, finance, and food services. The temporary help sector-where employment gains often foreshadow firms' intentions to hire staff in the coming months-has grown sharply over the past few months, increasing by 2.8 percent over the past quarter. The employment level in the temp sector is now only 26,400 jobs shy of where it had been before the recession.

Many sectors that saw employment losses in December now show gains because of the revisions to the employment survey. For example, while retail trade lost 2,000 jobs in January, the reported drop of 15,600 jobs in December was revised upwards to a gain of 9,000 new jobs. Similarly, construction's loss of 9,000 jobs in December was revised upwards to a gain of 5,000 jobs.

Average hours worked held steady at 33.8 hours per week, where it has been since September, but the index of hours worked-the total hours of all production or nonsupervisory workers-continued its upward trend and increased from 103.7 to 103.9 last month. The hours index has increased 0.8 since September and is now back up to where it had been in 2000.

Workers are now seeing strong wage growth alongside these increases in employment and hours. Over the last quarter, average annual wage growth was 3.3 percent, which translates into real wage growth since inflation has fallen over the last quarter. Wage growth was spread across industries, although retail, manufacturing, utilities, leisure and other services saw average annual wage growth of less than two percent.

One of the strongest signs of improvement in the household survey is the decline in the share of long-term unemployed. The share of workers who have been out of work and searching for employment for at least six months fell from 18.2 to 16.3 percent in January, its lowest level since March 2002. The median worker spent only 8.4 weeks unemployed, down from 8.5 over the last few months. This is the shortest median weeks unemployed since March 2002. Consistent with shorter durations of unemployment spells, there has been a sharp drop in the number of discouraged workers, from 515,000 in 2005, down to 396,000 in 2006.

The employment rate increased from 62.8 percent, where it had been since September, up to 62.9 percent, still 1.8 percentage points below the peak in April 2000. The employment rate increased for white, black, and Hispanic workers. Teen workers, however, saw their employment rates fall in January, although they do not appear to be trending downward overall over the past few months.

Employment gains were stronger for men than for women. Men's employment rates jumped back up to 72.7 percent, up from 72.4 percent where it had been for most of the fall. Women's employment rates did not see a similar bounce in January and remain at 57.7 percent, where it has been since August. Women's labor force participation rates fell from 60.5 percent in December down to 60.3 percent in January. This may be reversed next month, but given the lack of gains in the employment rate, it is certainly worth watching. Over the past quarter, there have been gains in employment for both married men and women, but declines in employment for women who maintain families.

Heather Boushey is an economist at the Center for Economic and Policy Research in Washington, D.C.

CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report.


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