The Big Lie About America’s Jobs Market

You know what they say about statistics: There’s lies, there’s damn lies, and then there’s…the guy driving the horse-drawn carriage around Central Park. 

An odd intro, I know, but let me explain… 

Maybe you saw last week’s employment news, when the Bureau of Labor Statistics released data for January showing that the U.S. economy added 517,000 jobs for the month. The unemployment rate sank to 3.4%, its lowest level since 1969.  

A Washington Post headline writer, clearly agog, labeled this “astonishing labor market growth.” 

Hmmm. 

I’m gonna go ahead and disagree. 

To be clear, adding 517,000 jobs is pretty good…in a vacuum. 

Alas, the economy does not exist in a vacuum. By which I mean these were not 517,000 fungible jobs, one equal to the other. The BLS segments the American labor market into scores of industries and sub-industries…and sub sub-industries. That’s the data I like to look at.  

Context is 90% of what matters. I mean, it’s one thing to hire 517,000 burger flippers earning on average $25,430 per year (according to average income data from the BLS). And something altogether different to hire 517,000 chemists earning nearly $85,000 per year. 

The devil, as you can see, is fully in the context. 

Quality earnings are far more important than job quantity…at least in terms of the long-term health of the economy. 

Which is where we return to our Central Park carriage driver. 

In January, the fastest-growing job category in America was “Scenic and Sightseeing Transportation,” a category into which government labelers place workers who “utilize transportation equipment to provide recreation and entertainment. This process does not emphasize efficient transportation; in fact, such activities often use obsolete vehicles, such as steam trains, to provide some extra ambiance.” 

The extra ambiance is clearly attracting customers because Scenic and Sightseeing Transportation grew by nearly 3.8% from the previous month. And it was up nearly 12% in the last year, making this one of the best year-on-year growth segments in the jobs market. 

Now, let me say there’s absolutely nothing wrong with driving a carriage. Honest work. And this is definitely small beer in terms of job quantity—just 33,100 workers overall populate this segment across the country, and most of them are earning between $33,000 and $37,500 per year. 

Nevertheless, the growth in this jobs category exemplifies a bigger trend in the data: Much of that “astonishing labor market growth” came by way of low- and relatively low-wage employment. A quantity of jobs over quality jobs. 

I parsed the entire labor report, and then cross-referenced job categories and sub-categories with BLS wage data for those categories. Here’s the story the January data tell: 

• Retail Trade employs just shy of 15.5 million workers, with more than half of them employed in stores selling auto-parts, food and beverage, and general merchandise. Most of them are earning below $30,000 per year, though the limited number of managers are earning low-$40K to high-$60K. 
• Professional and Business Services employs nearly 23 million workers, nearly half of whom are in “administrative and support, and waste and remediation services.” That entire category is janitors, freight stockers, groundskeepers, office clerks, and security guards. Average annual pay: $29,600 to $37,320. 

• Private Education and Healthcare covers nearly 25 million workers. Just over 21 million of those are in “health care and social assistance,” most of whom are home-health aides, medical assistants and secretaries, and personal care aides. They’re all earning on average $19,160 to just under $29,500. 
• Leisure and Hospitality gives us another 16.5 million workers, and nearly 12.2 million of those are working in restaurants and bars, and are earning between $25,430 and $38,140.   

What does all that mean? 

Well, when you subtract out the 22.4 million government jobs, all the non-farm jobs in America—basically private-sector work—total 132.7 million…which means nearly 60% of the American workforce are in categories populated by jobs that pay under $40,000 per year at most. Many are paying under $35,000. 

Even manufacturing jobs, once the birthplace of the American Dream and the jobs that built the middle class, are nothing spectacular these days. 

Uncle Sam counts 13 million manufacturing jobs. The bulk of those are paying $34,000 to about $47,000 per year. There are certainly some higher-paying jobs in that category—$88,000 to more than $130,000—but most of those, as you would rightly expect, are at managerial levels or demand higher levels of education. 

Transportation Equipment is a good example of this. So-called “team assemblers” are earning on average less than $45,000 per year. At the high end, aerospace engineers are earning more than $123,000. But there are more than 340,000 team assemblers, and less than 19,000 aerospace engineers. 

Or consider a job category called Social Assistance. 

Personal and home-care aides, as well as childcare workers, bring home paychecks of $26,000 to $29,000 per year. Managers are earning nearly $70,000. But there are just 62,000 such managers nationally, while home-care aides and childcare workers amount to nearly 2 million workers. 

The point in all of this is that the U.S. economy is not as whiz-bang as the government (and Washington Post headline writers) want Americans to believe. Yes, it’s great that the unemployment rate is so low and that Americans have a capacity to earn some level of income. 

But the level of income that most of the country is earning is problematic for the Federal Reserve as it continues to hike interest rates, even by small amounts now. 

Based on other stats I won’t heave upon you, credit card usage is accelerating, reliance on other forms of debt is increasing, and savings are dwindling. Each rate hike is another arrow to the heart of the American middle class that is struggling to feed the family, fuel the car, pay the rent, and keep the lights on. 

You wonder why American politics are so divisive? 

These kinds of BLS statistics I just shared tell you why fury runs so deep and why Americans are so eager to elect a batch of honest politicians who will address the rot. 

Haven’t found one yet, however. So, prepare for the long dark night of the American soul to grow darker.