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article imageMore U.S. jobs created, but most pay under $20 an hour

By Tim Sandle     Jan 6, 2019 in Business
The number of workers taken on by U.S. firms increased at the end of 2018, hitting a ten month high, although many of these jobs were in the lower pay range. Will this trend continue into 2019? Signals are this year will see a more precarious situation.
The initial headlines look good: U.S. employers have added the most workers compared with any time within the past ten months and wage gains have also increased. According to Bloomberg, payrolls increased by 312,000 in December 2018 (excluding farming) and hourly earnings have increased 3.2 percent year-on-year.
The level of unemployment is at such a low figure that the U.S. has not remained below 4 percent for a such a sustained period since the Vietnam war. The majority of job gains have occurred in job gains occurred in healthcare, manufacturing, construction and transportation and warehousing.
However, the analysis indicates that this end-of-year rise will be difficult to replicate in 2019. This is because of the uncertainty that surrounds Trump's U.S.-China tariff war; plus expected decreases in manufacturing, a housing slowdown, and a probable cooling in global growth, which is currently demonstrated by stock market wobbles.
Another issue is that while more jobs have been created, many of these jobs do not pay high. In the U.S. there are around 130 million people employed. Of these, 18 million earn less that $10 per hour. Fast food workers, for instance, are typically paid $8.81 per hour and the hotel staff who service rooms are on around $9.51 per hour, based on data provided by the U.S. Bureau of Labor Statistics.
Furthermost, of the 130 million jobs, a significant 63 million jobs pay $10 to $20 an hour, such as janitors who are typically on $10.86 per hour; secretaries, at $15.79 per hour; and truck drivers, who are on $18.61 per hour. Such workers do not have sufficient spending power to provide a significant boost to the economy.
Commenting on 2019, Mark Zandi, chief economist at Moody’s Analytics told The Guardian: "Job growth is strong, but has likely peaked...[data] suggests slowing underlying job creation. With very tight labor markets, and record unfilled positions, businesses will have an increasingly tough time adding to payrolls." This analysis suggests that 2018 may have been the peak for employment and wage growth, and that the pattern expected over 2019 looks more precarious.
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