- The economy is settling into its new shape, and it might mean lower pay for new workers.
- Job growth in April was concentrated in traditionally low-paying sectors like healthcare and retail.
- Wage growth, though slower, still outpaces inflation, which is still a boon for workers.
The economy is settling into its new shape after a long roller coaster ride — and it’s not all good news if you’re looking to land a big paycheck.
Jobs are still being added at a healthy clip and unemployment is still near a sustained historic low, according to the latest jobs report. It’s exactly what the Federal Reserve might be looking for, and signals continued good news for an economy that’s been bolstered by a booming labor market.
“The growth in wages have outpaced inflation, which translates into more money in the pockets of working families. That is not an accident,” Acting Secretary of Labor Julie Su told Business Insider.
But there’s a dissonance in the job market; if you’re a college-educated, white-collar worker, you might know that all too well. That’s because the industries that led job growth in April are traditionally low-paying.
It’s yet another sign that higher-paying jobs are becoming more scarce, and it comes as more Americans find themselves employed, but not necessarily stable. It might also be falling more on the shoulders of women, who are seeing historic employment figures.
For instance, the private education and health services sector led the pack in job growth last month — and while that might sound high-paying on its face, the data under the hood tells a different story. The bulk of job growth in the sector is happening in fields like healthcare and social assistance, which includes the traditionally low-paid workers in nursing and residential care facilities, and home healthcare workers.
“Healthcare is not just doing well,” Julia Pollak, the chief economist at ZipRecruiter, told Business Insider. “Healthcare is dominating everything. It’s added 56,000 jobs in this report, but it has added over 750,000 jobs over the past year.”
Indeed, job growth is concentrated in industries that are historically low-paying — and continue to pay less than the average across private industries. Those industries, and the subsets within them that are seeing big growth, also happen to be female-dominated, as Kate Bahn, the chief economist and SVP of research at the Institute for Women’s Policy Research, told BI.
“Where there’s been job growth has not been sectors where there has been high wage growth,” Bahn said, adding: “That’s interesting that there’s high labor demand in those industries — clearly — but it has not translated into high wage growth.”
The three sectors that saw net job growth of at least 20,000 last month all have average wages below those for all private employees:
That points to a continued dynamic in the labor market: White-collar workers are seeing an employment slump, as Business Insider’s Aki Ito chronicled. The hiring rate for those making over $96,000 is at just 0.5% — its lowest level since 2014.
It’s all a bit of a mixed bag. As Pollak notes, “wage growth has come down sharply, but it’s mostly come down in industries where it was very rapid before.”
Wages in the lowest-paying sectors have grown faster than those in higher-paying industries over the last few years, as demand for hourly workers skyrocketed and employers turned toward raising pay and benefits to try to plug shortages in a tight labor market.
“I think low-paid jobs have gotten a little bit better compared to how really awful they used to be,” Bahn said.
But as Bahn notes, “there’s a lot of evidence that women are really constrained and limited in their labor mobility when they are in these career paths of women-dominated jobs like healthcare and education.”
And the rise of these jobs might also be further contributing to another growing group undergirding some of the holes in the economy. A growing share of workers in the US are what’s known as “ALICE”: Asset Limited, Income Constrained, Employed. That means that they’re holding down jobs, and making enough money to be ineligible for many social services — but still aren’t getting by.
The workers below that ALICE threshold are doing even worse. They’re concentrated in industries like retail trade, healthcare and social assistance, and accommodation and food services — all of the jobs currently booming.
But even if wage growth isn’t as high as it was before, Nick Bunker — the economic research director for North America for Indeed Hiring Lab — pointed out to Business Insider that “wages continue to outpace inflation,” which could be good for job seekers.
“I think that’s a sign that, hey, you’re going to get more bang for every wage gain than you have in the past,” Bunker said.
