Press Release: Middle-Income Workers Lose in December

    The Bureau of Labor Statistics reported today that the economy added nearly 300,000 (292,000) nonfarm payrolls, beating market expectations. Of those jobs added, the private sector hired 275,000 workers. The unemployment rate continues to sit at 5%, so-called full employment.

    Last month we praised the jobs report. In November the economy added a majority (54%) of the jobs above our measured median wage line. Even better, a huge chunk (42%) of the new jobs went to the middle-income industries. We were cautiously optimistic that a new trend in the labor market was forming.

    Our caution was warranted.

    For months, we’ve talked about the U-shaped pattern in the labor market. That’s when jobs gained come mostly from the lowest and highest-paying industries, at the expense of the middle class. Now the “U” has begun to skew to the low-wage side.

    Analysis by Dent Research finds that nearly half (48%) of the jobs added in December fell in the lowest third of the wage range. The big winners in that wage bucket were administration and support services, and restaurants.

    Middle-income jobs saw just 21% of the job additions. Dent Research finds that we added a majority of the jobs above the median wage line. But just barely. We added 138,000 above and 137,000 below. We’ll call that even.

    Commenting on the December report, Dent Research President and Index creator Rodney Johnson said, “After last month’s report, the current employment figures are almost a complete reversal. The bad news is back.”

    Each month Dent Research produces a detailed chart depicting where the job additions fall along the wage scale. You can see the full results below:

    See larger image (http://click2.economyandmarkets.com/t/Cg/F84/HFc/ABfGgw/AALPew/AAIrNQ/AQ/_s3Y)

    To give you a clearer look at this U-shaped recovery in jobs, we simplified our graph below. Instead of the usual 12 wage buckets, we collapse them into thirds. This gives a clearer picture of how the middle class continues to lag behind:

    See larger image (http://click2.economyandmarkets.com/t/Cg/F84/HFc/ABfGgw/AALPew/AAIrNg/AQ/dMZu)

    The Dent Research Employment Index digs beneath the BLS’ headline numbers to measure the quality of jobs added each month. It provides a more complete picture of the job market by tracking where jobs are being created along the wage scale. For a more detailed explanation of our methodology, please click here (http://click2.economyandmarkets.com/t/Cg/F84/HFc/ABfGgw/AALPew/Y_k/AQ/YBGy) to view our employment white paper.

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