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Jobs: Not all good news
The monthly employment rate showed big improvement in payroll gains, but there are troubling signs.
March 4, 2005: 1:02 PM EST
By Kathleen Hays, CNN/Money contributing columnist

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NEW YORK (CNN/Money) - Martha Stewart's exit from prison has far more drama than today's employment report, and far, far less importance to most of the country. She will pick up where she left off and try to rebuild her company's fortunes. If she can do it, her employees and shareholders will benefit. Great.

Another month of healthy jobs growth, however, is a powerful piece of evidence that the U.S. economy is growing again. If it keeps doing so, that could encourage more companies to step up the plate and add workers.

Economists seem to agree that it was a solid report, based on the size of the payroll gains (262,000), and the fact that the increase was broadbased (from manufacturing to services to construction). Many expect it to continue.

But it wasn't all great news for workers.

Rising unemployment The unemployment rate ticked back up to 5.4 percent. Now part of that was because the Labor Department's household survey (separate from the establishment survey that measures reported hirings and firings by companies) showed more people entered the labor force. That often happens when unemployed folks see that friends and neighbors are starting to find work. And if you enter the labor force to find a job but haven't found one yet, you help push up the jobless rate.

The household survey also showed a drop in the number of employed, which also helped push up the unemployment rate. Sounds weird, but the two surveys often diverge, at least temporarily.

Weak wage growth Another slightly squishy sign is the fact that average hourly earnings showed flat growth in February and were up only 2.5 percent year-over-year. The average workweek was flat and the workweek fell in manufacturing.

Automaker cuts We know that the manufacturing jobs increases occurred to a large extent in transportation and that the auto companies just announced plans to cut output -- so that doesn't bode well for a repeat of factory jobs increases.

Small business weakness An interesting index of hiring outside the world of big corporations, called the SurePayroll's Small Business Scorecard, shows that there has been no hiring on average in this sector so far this year. Now remember, small businesses account for half of all jobs in the United States and two-thirds of all hiring so this is important.

Michael Alter, who is president of SurePayroll, a company that provides Web-based payroll services to thousands of companies across the country, thinks he knows why the firms in his survey aren't hiring more. He believes that because bigger companies are finally hiring again, a lot of people are leaving the small business sector for bigger business pastures. Not bad.

Let's hope Michael is right and let's hope that the kind of jobs gains we saw in February continue into the spring, summer and beyond. Because it's going to take a lot more than a comeback by Martha Stewart's company to keep the jobs engines revving -- it's going to take a comeback to the hiring game by all the companies who've been running as fast as they can with as few workers as possible. That would truly be a good thing.

Click here for more HaysWire.

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-- Kathleen Hays is economics correspondent for CNN and contributes to Lou Dobbs Tonight.  Top of page

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