The Bureau of Labor Statistics (BLS) provides the May jobs report. Top line job gains were moderate at 75,000 and the unemployment rate holds steady at 3.6%. However wage growth of 3.1%, and a monthly shift of 299,000 jobs from part-time to full-time reflects tight labor market in specific Main Street (blue and white collar) jobs.
The overall gain of 75,000 for May is low considering the economic growth. However, a review of the underlying data tells a story of a tightened labor pool; specifically inside the Main Street, middle-class, blue and white collar labor market. [Table B-1]
Overall wage growth of 3.1% is very strong, and driven primarily by increased wages in “non-supervisory” payroll; ie. the actual workers (non mgmt). May was the 10th straight month with annual wage gains of at least 3 percent. Wages for non-supervisory workers continue to rise at a faster rate of 3.4 percent.
With inflation remaining low (1.4%); and assuming inflation is unchanged in May; the 3.4% non-supervisory wage growth, at current wage rates, is equivalent to nearly $900 per year in real wage growth for a blue-collar worker at 40 hours per week. [Table B-8]
We see the second large indicator of a tight Main Street labor market in the shift from part-time to full-time employment:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 299,000 in May to 4.4 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. (BLS Link)
In addition to the wage growth, the PT to FT shift is a key metric. You might be familiar with how many people in the Obama economy were shifted from Full-Time status to Part-Time status as a result of prior administration policy (Obamacare, etc.). The chief complaint was people having to take two PT jobs instead of one FT job etc.
We are now seeing a reversal pattern where part-time workers are being shifted into full-time positions. In the past 12 months 565,000 people have shifted from PT to FT. With more hours and higher wages it is Main Street workers who are benefiting.
- Employment in professional and business services continued to trend up over the month (+33,000) and has increased by 498,000 over the past 12 months.
- Employment in health care continued its upward trend in May (+16,000). The industry has added 391,000 jobs over the past 12 months.
- Construction employment changed little in May (+4,000), following an increase of 30,000 in April. The industry has added 215,000 jobs over the past 12 months.
- Employment showed little change in May in other major industries, including mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government