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Better times for better pay
A closer look at the job market's recent strength shows growth in higher paying jobs is picking up.
May 10, 2005: 5:32 PM EDT
By Chris Isidore, CNN/Money senior writer
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NEW YORK (CNN/Money) - Growth in the job market isn't just Wal-Mart greeters or burger flippers any more.

A closer look at the strong April jobs report shows that higher-wage jobs are back -- finally growing a hair faster than lower-paying jobs for just the second time in nearly four years. It also happened last October.

And even some high-paying businesses that kept shedding workers while the overall job market rebounded modestly last year are finally showing job growth.

"We're seeing both the quantity and quality of the jobs being created improving," said Mark Vitner, senior economist with Wachovia Securities.

When the economy started shedding jobs five years ago, an analysis by investment bank UBS showed the number of people working in high-wage jobs fell faster and further than those in jobs paying below-average wages.

When jobs losses reached their worst point three years ago, high-wage workers were losing their jobs at more than twice the rate of low-wage workers. And even when the labor market started recovering in the fall of 2003, growth in higher-wage jobs lagged well behind lower-paying jobs.

But since last fall, low-wage job growth has just outstripped high-wage job growth. And in April, high-wage categories posted a 1.9 percent year-over-year gain, edging past the 1.8 percent growth in lower wage jobs.

"Almost every category of employment has improved in the last couple of years," said Jim O'Sullivan, U.S. economist for UBS. "But compared to what we were seeing during much of those two years ago, it's now effectively a balanced recovery."

O'Sullivan said gains in higher paying jobs will stay on par or edge past low-wage job growth in the months ahead. But more lucrative job categories won't open a big lead, even if hiring continues to improve, he added.

"Even in the late 90's, they were fairly close to each other," he said.

Telecom job losses ending

Even some economists who believe that job growth and wage improvements are weak overall see some signs of improvement in the higher end of the labor market.

"It's really the tale of two cities," said University of Maryland professor Peter Morici. "For highly educated and highly skilled people, especially those who don't face competition from overseas, the job market is pretty good. For others, it's not so good."

Morici said part of the pickup in higher wage jobs is simply because employers in those sectors have slowed or ended job-cutting. "At some point the telecommunications (sector) has to stop shrinking," he said.

Last month's job report shows telecom firms adding 6,700 jobs, to just over 1 million employees, a modest gain compared to the 24,400 jobs added by retailers, for instance, but still the best single month for telecom hiring since February 2001. Even with the pickup in hiring, telecom has about 30 percent fewer workers than four years ago.

Computer system design and related services, which lost jobs from 2001 through early 2004, also posted a modest gain in April, a trend that started late last year.

All these factors helped average weekly wages jump $4.88, or 0.9 percent, to $542.40 in April -- the biggest percentage gain since August 1997. But part of that was due to a longer work week. Average hourly wages rose a more modest 0.3 percent to $16, similar to the gains seen in March.

Despite the renewed growth in higher paying jobs, lower-wage service jobs still saw big increases last month. Hotels, restaurants and others in the sector added 58,000 jobs last month -- paying an average $9.10 an hour. Meanwhile, manufacturing lost an estimated 6,000 jobs. The national average manufacturing job pays $16.43 an hour, according to the Labor Department.

Wachovia's Vitner said some manufacturing job losses came in lower-paying sectors such as textile and clothing, furniture and food. At the same time, though, some higher-wage manufacturing jobs -- in computers, electronic products, oil, coal and chemicals -- posted gains in employment.

"Not all manufacturing jobs are high-paying jobs," he said.

One high-wage manufacturing sector that lost jobs last month: automakers and auto parts.

Other economists say that even lower-paying service sector jobs will probably see more salary gains in the years ahead.

"It's tempting to say these are terrible jobs, but the service sector has more wage pricing power than the manufacturing sector," said Anthony Chan, senior economist with JPMorgan Asset Management. "If you're getting a pay increase from your boss today, it's probably not in manufacturing."

For more on the job market and it what it means for you, click here.  Top of page

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