Today’s jobs report from the Bureau of Labor Statistics painted a mixed but troubling picture of the U.S. labor market. Although the headline unemployment number fell by a tenth of a percentage point to 7.6%, the number of new jobs created outside the agricultural sector was just 88,000, far below what we’ve seen in previous months.
But hidden beneath those headline numbers are some interesting observations:
1). Almost 500,000 people dropped out of the officially measured labor force, showing that many unemployed workers have given up actively seeking work. Because unemployment rates are based on labor-force figures, a smaller labor participation rate can make the headline unemployment number fall even with weak job growth.
2). Job-growth figures from January and February were both revised upward, adding a total of 61,000 jobs compared to previously reported estimates.
3). Wage growth continued to be minimal, with average hourly pay of $23.82 rising just a penny from last month and at a 1.8% pace over the past year.
4). Average weekly hours worked rose by six minutes to 34.6 hours.
But how do all these numbers really affect you? Let’s look at three big impacts from the jobs report on ordinary Americans.
1. What industry you work in really does matter.
Throughout the past several years, different industries have had much different experiences. For those working in the health care field, for instance, the recession had very little impact on employment, as jobs growth continued nearly unchecked throughout the period in light of rising demand for health services from an aging population. In the construction and mining industries, however, unemployment remains at very high levels above 15%. Weakness in those industries has collateral impacts on related companies. Recent layoffs at Caterpillar Inc. (NYSE:CAT) and Joy Global Inc. (NYSE:JOY), both of which rely on construction and mining activity to sell their machinery, reveal the extent to which the labor market is interconnected.
2. Don’t expect big raises.
Economists love the fact that wages aren’t growing quickly, as it helps keep inflation down. But for families facing higher costs for gasoline, food, and other necessities, weak wage growth is just one more challenge to overcome. Again, where you work matters for your earnings, as workers in the financial industry have seen larger wage gains over the past year than leisure and hospitality workers. That matches up with news from Wall Street, where Goldman Sachs Group, Inc. (NYSE:GS) has boosted pay for its workers and Bank of America Corp (NYSE:BAC) recently rejected a call to cut pay for brokers in its Merrill Lynch division. Overall, though, few people are seeing strong wage growth, and companies seeking to keep their profit margins high will keep it that way if they can.