One of the defining features of jobs "recovery" and the main reason why wage growth has been so far below the Fed's expectations for years it has prevented wage inflation from appearing despite years of QE, is that the quality of jobs added month after month has disappointing. May was no difference.
Yes, the headline print of 280K job additions was great, but a quick look at how the BLS got there shows that nothing has changed because four of the five main job additions were, as usual for the lowest paid jobs.
Here is the breakdown:
- Education and Health (i.e., teachers): +74,000
- Leisure and Hospitality (i.e., waiters): +57,000
- Retail Trade (i.e., minimum wage store clerks): +31,400
- Temp Help: +20,100
In fact, these lowest quality jobs accounted for two-thirds of all jobs gains in May.
As for the well paid jobs: Mining and logging (energy workers): down 18,000, Information: down: 3,000, Financial services: up 13,000, and Construction workers: up 17,000 which is not bad, however it is down more than half from April's +35,000.
Incidentally, by consistently adding the lowest quality jobs, not only is the conundrum of America's missing wage growth resolved, but so is the quandary of why US labor productivity has gone nowhere in the past 5 years.