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July 11, 2004

Morgan Stanley's Roach on Job Quality

Possibly my favorite mainstream economic analyst is Morgan Stanley's Stephen Roach, who shares my skepticism of headline statistics and has focused strongly on the quality of jobs created, not just their quantity.

In this commentary, he analyzes the lack of quality in jobs created in recent months:

In scanning the detailed industry breakdown of this recent pick-up in job creation, the leading sources turn out to be restaurants, temporary hiring agencies, and building services. Collectively, these three groupings, which comprise only 9.7% of total nonfarm payrolls, accounted for fully 25% of the cumulative growth in overall hiring from February to June 2004. Moreover, hiring has accelerated in other industries at the low end of the job hierarchy — namely, clothing stores, couriers, hotels, grocery stores, trucking, hospitals, social work, business support, and personal and laundry services. Collectively, this latter group of industries, which makes up 12% of the nonfarm workforce, accounted for another 19% of the total growth in business payrolls over the past four months. Putting these segments together, low-end jobs accounted for about 44% of total hiring over the February to June interval, double their share in the workforce.

Even more startlingly, of the 509,000 in new total nonagricultural employment from February to June , 495,000 or an astonishing 97% of the cumulative increase were part-time jobs-- showing why the average work week has been dropping so dramatically.

This "recovery" is like no other in post-WWII history. Job growth is anemic and the jobs created generally stink. Profits are soaring, wages are stagnant, and benefits are being slashed.

Posted by Nathan at July 11, 2004 03:46 AM