News > Economy
The truth about job growth
The labor market broke a losing streak, but one analyst questions its recovery.
October 7, 2003: 2:55 PM EDT
By Les Christie, CNN/Money Contributing Writer

New York (CNN/Money) - Though many cheered last week's news of jobs creation in September, John Challenger, CEO of Challenger, Gray & Christmas, a job placement company, notes a number of disturbing trends in the Labor Department report.

The report showed payrolls expanding by 57,000 workers, the first increase in eight months. But Challenger gave several reasons to not get too excited:

Less pay "While many celebrated, the numbers indicate that things have not improved for most workers; in some cases, workers are earning 43 percent less," said Challenger.

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Instead of working in manufacturing, where Challenger says the average job pays $650 per week, many of the displaced workers have taken retail positions, which pay an average of $373 a week, or jobs in business services, which pay $579 per week.

"We've lost 2.5 million manufacturing jobs since the recession hit," says Challenger.

That employment gains in September concentrated in low-paying jobs is borne out by the fact that unemployment among those with less than a high school degree fell from 9.4 percent to 8.6 percent while unemployment among those with a bachelor's degree or higher rose from 3.1 percent to 3.2 percent, according to Challenger.

More part-time work One stat that concerns Challenger is that nearly 5 million people now work part-time jobs, the highest level since November 1993. "Benefits are much worse for part-time workers. The number of people without health care insurance has gone over 40 million."

On the other hand, many economists believe that spikes in the numbers of part-time workers indicate that companies are slowly starting to build up their labor force -- getting their feet wet again -- and that many of those workers will migrate to full-time positions.

Long-term joblessness Another troubling trend Challenger identifies is that long-term joblessness, those out of work for 27 weeks or longer, has grown to 2.1 million, the highest level since November 1983.

And that figure fails to account for many who have removed themselves from the labor force entirely; the percentage of the population either working or looking for work has fallen to 66.1 percent, the lowest it's been since December, 1991.

John Challenger

Bleak outlook from small business Challenger also points out that a survey of small businesses (fewer than 500 employees) found that only 14 percent of them plan on adding workers in the near future. "That is troubling," says Challenger, because, "Small businesses represent more than 99 percent of all employers and historically have accounted for about 60 to 80 percent of all new jobs."

Challenger cites two major factors that contributed to the jobless recovery: technology gains that increased productivity; and the globalization of the economy and the labor market. The globalized labor market now affects both white-collar and blue-collar jobs, and a highly visible impact of this is the transfer of computer support, software design, and other high-paying, tech jobs to South Asia.  Top of page

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