In a sign of an improving U.S. job market, the growth of
higher-paying hourly jobs is outpacing that of lower-paying jobs for the first
time in nearly four years, according to an analysis of Labor Department data by
the Economic Policy Institute.
The Washington-based liberal economic think tank, which has
bemoaned the dominance of low-paying jobs in recent years, compared
year-over-year employment growth and wage data for nonmanagerial jobs in 20
private-sector industries. The analysis found that nine sectors expanding as a
share of total employment paid about 3% more in average hourly wages than 11
sectors that were contracting in the first quarter. That marked the first time
since the most recent recession that higher-wage jobs have grown faster as a
share of total jobs.
"It's a good sign for the economy," says Elise Gould, an
economist at the institute. "We want to see jobs growing faster in higher-paying
industries."
In 2003, expanding sectors paid nearly 20% less than
contracting ones, as a result of steeper job losses in higher-paying sectors
during that period. By comparison, faster-growing sectors during the
mid-to-late-1990s paid far more than slower-growing ones -- about 30% more in
1998 -- propelled by job growth in the professional and technical services,
information and financial sectors.
"The growth of higher-paying jobs is a reflection of the belief
that the momentum of the expansion can be sustained," says Sophia Koropeckyj, an
economist at Economy.com.
Many companies have held off adding costly skilled workers as
they wait to see whether the expansion will endure, relying instead on temporary
workers and productivity enhancements to produce more with less, Ms. Koropeckyj
says. The slow growth of higher-paying jobs relative to lower-paying ones during
the past few years can also be seen as a consequence of the late-1990s boom and
subsequent bust, as companies corrected for previous excesses in capital
spending and hiring, other economists say.
Since hourly jobs account for 80% of the work force, the
surging growth of the relatively higher-paying categories is a plus for the
economy's health. This higher-paying group includes professional and
technical-services jobs, where hourly wages are $24.26 on average, and
construction, where the hourly average is $19.42. The lower-paying group
includes retail trade and arts and entertainment, where the hourly averages are
$12.34 and $12.81, respectively.
The growth of some higher-paying sectors is linked to booming
parts of the economy. Construction, for instance, is tied to the red-hot housing
market. But other sectors depend more on the overall health of the economy, such
as transportation and warehousing, which added 115,000 jobs in the past year.
At transportation company Schneider National Inc., based in
Green Bay, Wis., job growth is being fueled by steady increases in demand from a
broad range of customers. The company, which has 15,500 truck drivers, plans to
hire 300 new drivers in California, Alabama and Ohio in the next few months.
This year, it also expects to add 80 diesel mechanics, who typically earn $20 or
more per hour, to boost its staff of 800 mechanics.
"Even if manufacturing remains flat, there is still going to be
growth in trucking as long as the economy continues to grow," says Scott Arves,
president of transportation for Schneider.
The current growth of higher-paying jobs highlights the
increasing demand for better-educated workers, says David Kelly, an economic
adviser at Putnam Investments, who has tracked job growth and related wage
trends during the past year.