ABA Banking Journal - April 2012 - (Page 8)

the economy | by MarK ViTNEr Why job gains won’t boost incomes Private-sector employers added a larger-than-expected 233,000 jobs in February, yet average hourly earn4.5% 4.5% ings rose just 0.1%. The weak wage Average hourly earnings growth reflects an unusually heavy Year-over-year percent change 4.0 4.0 mix of low-paying jobs. This job creation is good news and continues the recent, positive 3.5 3.5 trend of stronger employment readings. Private employers added jobs 3.0 3.0 every month for the past two years; gains over the three months end2.5 2.5 ing in February averaged 250,000 per month. Since employment bot2.0 2.0 tomed out two years ago, 3.9 million private-sector jobs were added. Despite this, average earnings con1.5 1.5 tinued to moderate and are up just Year-over-year percent change: Feb @ 1.9% 1.9% over the past year. Sluggish 1.0 1.0 2007 2008 2009 2010 2011 2012 growth in hourly earnings is a reason consumers are troubled by higher gasoline prices. Real after-tax per-capita income fell in two of the past three may have more than one of these months and is down modestly over the past year. The most recent figures sugpart-time jobs. All this suggests gest income growth failed to keep pace with inflation again in February. recent job-growth gains are not as Why are average hourly earnings up so little? A disproportionate share big a step forward as widely thought of the jobs added over the past two years has been in relatively low-paying and helps explain recent weakness industries. Hiring in retail trade, the leisure and hospitality sector, temin productivity growth. n porary-help firms, and the home health-care industry has accounted for 40.7% of the jobs added during this period. By comparison, these industries Mark Vitner is senior economist account for just 28.9% of the workforce. Also, a large proportion of the for Wells Fargo Securities. The jobs tend to be part time. Average weekly earnings for workers in the home information and opinions herein health-care sector were just under $538 in 2011. Average weekly earnings are for general information in the leisure and hospitality sector were $342; temp firms, $551; and retail use only.Wells Fargo Securities, LLC does trade, $500. Average weekly earnings for all workers were around $660. not guarantee their accuracy or completeThe stronger relative growth in these lower-paying jobs does not simply ness, nor does Wells Fargo Securities, LLC reflect a bounce back from recession. Retail trade, leisure and hospitalassume any liability for any loss that may ity, temporary help, and home health care accounted for just 25% of recesresult from the reliance by any person upon sion job losses—well below the share of recent gains. One theory is these any such information or opinions. For adindustries have tended to have a large number of openings throughout the ditional disclosures relating to reports issued business cycle. Job seekers may have gravitated to them after exhausting by the Wells Fargo Securities Economic unemployment insurance and being unable to land higher-paying positions Group please visit www.wellsfargo.com/ elsewhere. Moreover, many displaced workers from higher-paying industries economics 8 | ABA BANKING JOURNAL | april 2012 Photo: PhB.cz (RichaRd Semik) /ShutteRStock.com http://www.PHB.CZ http://www.wellsfargo.com/economics http://www.wellsfargo.com/economics

Table of Contents for the Digital Edition of ABA Banking Journal - April 2012

ABA Banking Journal - April 2012
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
Picture This
Young CEOs: Our turn
Pass the Aspirin
Tech Topics
What is your appetite for risk?
Top-performing big banks
Compliance Clinic
Compliance Inbox
ABA Resources
Legal Issues
First Person

ABA Banking Journal - April 2012

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