A new index has been released that shows job quality may be suffering.
The U.S. Private Sector Job Quality Index (JQI) assesses job quality in the United States by measuring desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs. The JQI results also may serve as a proxy for the overall health of the U.S. jobs market, since the index enables month-by-month tracking of the direction and degree of change in high-to-low job composition.
This index is a venture between public academic and nonprofit institutions, namely Cornell University. A reading of 100 on the index indicates that there is a perfect balance between high paying and low paying jobs. The index currently sits around 80, showing a gradual decrease in job quality.
“The bottom line is that this index is tracking income, and that is a function of wages and hours worked. And the main change that we’ve seen, particularly since the great recession, is a decline among hours work among low wage workers. So that actually has impacted people even more. So when we talk about quality, we’re referring just to that figure, to the issue of how much people take home from jobs. And unfortunately the majority of jobs have been created over the last 10 or 15 years have been in this low wage category,” explained Dan Alpert, U.S. Private Sector Job Quality Index co-author and Cornell professor on CNBC
One question that has arisen is whether employees are trying to rig the system so that they could keep employee hours at a limit where they would not have to pay benefits or be subject to certain regulations.
“There’s not a lot of evidence of this being benefit driven. What there is a significant change in the way employers employ people, and certainly in some of these classification do you have just in time labor, people who are saying look, they’re not gonna tell you how many hours you’re going to be able to work, but will tell you want to come to work. So people are working these very very strange schedules. So strange that they’re unable to hold two jobs because they don’t know whether they will be working in the first job,” Alpert said.
Despite job quality potentially suffering, the jobs report totals Friday easily bested the Wall Street consensus, where economists surveyed by Dow Jones had been looking for consistent job growth of 187,000 and saw the unemployment rate holding constant from October’s 3.6%. The decline in November’s jobless rate came during a corresponding 0.1 percentage point fall in the labor force participation rate, to 63.2%.
“This is a blowout number and the U.S. economy continues to be all about the jobs,” Tony Bedikian, head of global markets for Citizens Bank said in a note. “The unemployment rate is at a 50-year low and wages are increasing. Business owners may be getting more cautious due to trade and political uncertainty and growth may be slow, but consumers keep spending and the punch bowl still seems full.”
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