December Payrolls: More Jobs, Less Pay

Economic Pulse
January 9, 2015
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Today’s payroll report showed a continuation of the themes that characterized 2014: robust growth (particularly in the office-using segment), a restrained tendency for workers to return to the labor market (indicated by a continued downtrend in the labor force participation rate alongside a sustained downtick in the unemployment rate) and a lack of wage growth. Even as the unemployment rate hit a new cycle low of 5.6 percent, nonfarm payroll employment increased by 252,000 and the prior two months of payroll data were revised higher by an additional 50,000 jobs, average hourly earnings contracted by 0.2% on a month-over-month basis.

Employment in professional and business services rose by 52,000 in November (Table 1 and Chart 1 below). Accounting and bookkeeping services gave back all of the job gains from the prior month, while temporary help services and computer systems design services continued to add workers. Additions in the financial activities and information sectors were in line with average gains over the past year.

The lack of wage growth is one question that will weigh on policy markers’ minds in 2015, particularly against the backdrop of an already weak inflation outlook. As shown on Chart 2, almost all sectors showed a decline in hourly wages—even outside of seasonal retail workers—worrying news if a lack of wage growth is accompanied by a lack of increase hours worked.


Table 1. Monthly Change in Office-Using Payrolls by Category (000s, SA)
Monthly Change in Office-Using Payrolls by Category (000s, SA)

Chart 1. Office-Using Employment and Total Payrolls, December 2007 – December 2014 (Seasonally-Adjusted, 000s)

Office-Using Employment and Total Payrolls, December 2007 – December 2014 (Seasonally-Adjusted, 000s)

Source: Bureau of Labor Statistics

Chart 2. Average Hourly Earnings Growth and Average Workweek by Sector
Average Hourly Earnings Growth and Average Workweek by Sector

Source: Bureau of Labor Statistics