October Jobs Report: High Earners Are Leaving Rest Behind
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(Bloomberg View) -- U.S. workers are still waiting to see the kind of pay raises they once considered normal, with one notable exception: The highest earners are leaving the rest behind.
For the most part, the latest jobs report portrayed an economy growing at a steady pace. Employers recovered from a hurricane-slammed September to create an estimated 261,000 jobs in October, bringing the three-month average to 162,000. That's plenty to keep reducing the unemployment rate, which declined slightly to 4.1 percent (albeit this month due to an increase in the number of people not actively seeking work, and hence not counted as unemployed).
The persistent demand for workers, though, isn’t pushing up wages as much as one might expect. Average hourly earnings were up just 2.4 percent from a year earlier, the slowest pace since early 2016 and about a full percentage point short of the pre-recession growth rate. Here's how that looks:
That said, the malaise isn’t affecting everyone equally. Workers in high-wage sectors -- such as banking, law and technology -- are faring quite well: Their average hourly earnings were up 3.1 percent in October from a year earlier. That compares with 1.7 percent for middle-wage sectors and 2.5 percent for low-wage sectors:
The disparity reflects a longer-term trend toward greater wage inequality, in which the most prosperous are pulling away. One big driver has been educational attainment, although possibly less so in recent years. Beyond that, research suggests that the winning occupations tend to be those that require unique skills, are the hardest to automate and are the least vulnerable to competition from abroad.
The details of the wage data are consistent this picture: Some of the weakest gains were in durable goods manufacturing, which is easily automated and competes with imports, and in retail trade, where brick-and-mortar stores are giving way to online shopping. By contrast, workers in high-touch, non-routine occupations did relatively well -- including in the low-wage leisure and hospitality sector. Here's a ranking by sector:
To be sure, a growing economy could yet drive broader gains, particularly if companies make more productivity-enhancing investments and the labor supply tightens. In the longer run, though, people may have to choose their vocations carefully if they want to remain in the narrowing ranks of the well-to-do.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mark Whitehouse writes editorials on global economics and finance for Bloomberg View. He covered economics for the Wall Street Journal and served as deputy bureau chief in London. He was previously the founding managing editor of Vedomosti, a Russian-language business daily.
To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net.
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