Employment numbers slip: Anomaly, or new trend?

Talk about a reversal of fortune, and a change in trend and momentum: Today's Employment Situation Summary shows that the U.S. economy continues to stutter forward in what I've long called "slow growth mode." That is to say, ongoing and steady advances in employment that continue inching upward, but fail to deliver the kind of movement needed to lift consumer confidence and improve future economic forecasts and business outlooks.


Discouraged businessman uses computer

From an employment sector standpoint, bright spots are few and far between. Professional and business services keeps growing, with 47,000 jobs added for August, and over 600,000 jobs over the preceding 12-month window. Inside this sector, administrative and support services logged the biggest gain (+23,000), with management positions (+8,000), architectural and engineering services (+3,000), and management and technical consulting services (+3,000) also up.


The list of other winning sectors includes healthcare (+34,000, a perennial growth area of late), social assistance employment (+9,000), leisure and hospitality (+22,000), and construction (+20,000). And while retail employment lost some ground (-8,000, which reflects a loss of 17,000 jobs at retail and beverage stores, offset by a gain of 5,000 jobs at automobile dealerships) most other industry sectors remained more or less unchanged, including the primary "home sector" for information technology, which the U.S. Bureau of Labor Statistics simply calls "information."


Perhaps the most interesting and revealing data in this latest report pertains to wage growth. Alas, many of the new jobs that are being created in our current situation pay hourly or annual salary rates that are lower than one might like, and wage growth remains pallid and weak as well. This report indicates that overall average hourly wages went up a paltry six cents per hour ($0.06) for August, for an hourly pay rate of $24.53. In the past twelve months, wages have increased by only 2.1 percent, just barely keeping pace with inflation (which is currently running at 2 percent according to the U.S. Inflation Calculator).


Factoring inflation into the mix, most economists believe that wages in the United States have been flat for the past decade (see "A Decade of Flat Wages" from the Economic Policy Institute, posted on Aug. 21, 2013). This also contributes to the intense frustration that most middle-class workers and their families are experiencing nowadays, including most of those who work in IT, and helps to explain a continued lack of consumer confidence throughout North America.


A closer look at the information sector reveals the following numbers for August 2013 and August 2014: 192,000 unemployed for that month in 2013 versus 131,000 in 2014. Percentage-wise, this is reported as 6.6 percent versus 4.5 percent. It shows a nice dip in IT unemployment over the past year, with a current percentage value that is generally considered in the range of "full employment" (which usually applies for values of 5.5 percent or less) for various sectors of the U.S. economy. By dividing the number of unemployed by the percentage of the IT workforce represented thereby, we can also determine the size of the IT workforce for August 2013 and 2014. For 2013, that calculation produces a workforce size of just over 2.9 million (2.9091); the 2014 value is nearly identical (2.911).


These calculations indicate only a very slight addition of perhaps 2,000 or so jobs to the IT workforce over the past 12 months, which is certainly low enough to fall within the margin of error for reporting such numbers (which are routinely corrected by greater amounts in month-to-month reporting revisions). The size of the IT workforce is thus about as FLAT as the reporting mechanisms permit it to be: Most important, it shows no significant growth in the sector over the past year. I submit that, until the information sector starts adding jobs month-over-month, this engine of economic growth can't run as fast as it's capable of going, nor can it do its part to spur overall economic growth, either.


My conclusion is that the status quo of slow growth is going to stick with us for some time yet, and that the recovery — such as it is — will remain meek and modest for the months ahead. I'd like to see the average monthly job growth climb back over 200,000 and stay there, though. We need monthly numbers at or over 300,000 to sustain "vigorous growth."


At the moment, I'm hoping we can all settle for "modest growth" with monthly job creation figures in the 200,000-to-240,000 range to keep the recovery chugging forward. The real burden, however, falls on the unemployed and underemployed. Without vigorous growth, many of them will never have the opportunity to rejoin the workforce in permanent, full-time positions paying some kind of living wage.


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About the Author

Ed Tittel is a 30-plus-year computer industry veteran who's worked as a software developer, technical marketer, consultant, author, and researcher. Author of many books and articles, Ed also writes on certification topics for Tech Target, ComputerWorld and Win10.Guru. Check out his website at www.edtittel.com, where he also blogs daily on Windows 10 and 11 topics.