US economy's latest output: better jobs

Newest job numbers show that businesses are expanding opportunities in high-wage fields.

The US economy isn't just producing jobs these days, it's also producing good jobs. Alongside the ads for jobs handling a cash register or a spatula are these new opportunities:

• In St. Louis, AFB International is enlisting both technicians, paid $30,000 to $40,000, and PhD scientists, offered $80,000 to $100,000, in its quest for the perfect pet food.

• In Delaware, Honeywell plans to hire people at $40,000 to $100,000 to work in a data-storage center.

• In southern California, some of the latest openings involve working on the railroad, for $35,000 to $70,000 a year. Union Pacific plans to add 2,000 employees altogether.

These reports in the past month symbolize a welcome trend during an economic expansion that at first offered only tepid job gains, both in quantity and quality.

This good news about the breadth of job creation comes against a backdrop of labor-market anxiety that has persisted despite the economy's solid overall footing. Competition from imported goods, the threat of outsourcing services abroad, and a controversial influx of illegal laborers are just some of the forces that make many workers worried about their future.

Creating good jobs - the kinds that can keep American living standards rising - appears likely to remain a challenge. But the current employment picture at least indicates movement in a positive direction.

"We're creating lots of all kinds of jobs, across many industries, occupations, and pay scales," says Mark Zandi, chief economist at Moody's But he adds: "If your skill sets are rusty, or at the low end of the skill range, you're going to have a tougher time."

The economy added 211,000 jobs in March, according to a Labor Department report Friday - a solid showing about on par with expectations. The unemployment rate fell a notch, to 4.7 percent.

The new jobs still include plenty at the low end: An analysis by Merrill Lynch finds that some 40 percent of the net gain in March came in two areas known for low pay: retail services and leisure/hospitality, which includes restaurants.

But this is just part of a broader tapestry. Management and professional occupations are employing 1.2 million more people this month than a year ago - or about 1 in 3 new jobs in America. This is the highest-paying of five broad categories tracked by the Labor Department. Not all of them are CEOs or engineers, but the median paycheck for full-time workers in this category is $937 a week, far above the US median of $651.

The construction industry continues to hammer out more than its share of new jobs. It accounts for about 6.4 percent of US jobs, but has provided 14.4 percent of the past year's job growth. The quality of construction jobs is mixed - often offering higher hourly pay than the US median but with lower benefits.

Even the manufacturing sector, which has long offered blue-collar workers a measure of middle-class prosperity, appears to be stabilizing after a period of heavy job losses. Despite downsizing in the automotive industry, 175,000 more people are employed in production occupations today than a year ago.

"As this recovery gets under way, professional services have begun adding jobs fairly broadly," says Jared Bernstein, an economist at the liberal Economic Policy Institute (EPI) in Washington.

EPI tracks the weighting of higher- versus lower-paying jobs that are being added to the economy. For much of the current expansion, which began at the end of 2001, that indicator has been negative.

In the past year, however, it has turned positive, meaning that the new jobs in the economy are the kind that tend to pull average wages up, not down.

Beyond professional services, one example may be construction. The housing market is cooling, but commercial building is heating up.

"More of the work will be in nonresidential construction," predicts Michael Carliner, an economist at the National Association of Home Builders. That could mean demand for higher skills, such as equipment operation, that boost pay.

The question, however, is how much of today's strengthening labor market represents cyclical trends, rather than long-term gains.

At this point, perhaps midway into an expansion phase, it's not unusual to see the job mix improve and pay to rise in new and existing jobs alike. "I would expect wages and compensation to increase faster," says Rae Hederman of the conservative Heritage Foundation in Washington.

How long that pattern lasts will depend in some measure on the Federal Reserve, which is now trying to decide whether to raise interest rates further. Setting rates too high, some experts warn, could slow the economy and dampen job growth.

The labor market's gains are beginning to take on the shape of a barbell, with growth weighted heavily at the two ends of the pay scale. During the current expansion, the bulk of new jobs have come in either the highest-paid of five broad occupational categories - management and professional - or the lowest-paid, services. Together the two sectors now account for more than half of all jobs. (The other three major categories are sales and office work, construction and natural resources, and production/transportation.)

The economy's overall share of jobs with strong pay and benefits has failed to grow during the past quarter century, even though workers today have higher skills and more technology to make them productive, says John Schmitt, an economist at the Center for Economic and Policy Research, a liberal research institute in Washington. That's a break with the past, he says, when "wages typically tracked closely with productivity."

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