Feb. 6, 2006 – Last week, the Department of Labor announced that the unemployment rate dropped to a four-year low and hourly wages rose faster than they have in nearly three years. The news, though, is little to cheer about, according to an analysis released by the Economic Policy Institute (EPI).
While the economy appears to be expanding, the job-growth rate â€“ a key indicator of long-term fiscal health â€“ is lagging behind the 2.8 percent growth rate posted in the 1990s. Other potentially ominous economic indicators include hours worked, which have not risen above 33.8 per week, EPI said, and drops in information-services employment and retail trade, factors which may portend a "weakening in consumer demand."
Additionally, the unemployment rates for the nationâ€™s largest minority groups remained well above the national average, with 8.9 percent of blacks and 5.8 percent of Hispanics reported out of work, according to the Labor Departmentâ€™s Bureau of Labor Statistics (BLS).
Further compounding the recovery data is the fact that, though hourly wages are increasing, real earnings continue to fall when measured against inflation, EPI found in a separate analysis released early last week. The economic think tank also found that health care and associated benefit costs are growing at a slower rate than usual, due in large part to falling employer commitment to providing such benefits.
Other BLS findings show that blue-collar jobs are gaining ground in comparison to managerial posts and that service sector jobs increased by 135,000, marking about two-thirds of the overall job gains. The service sector category is broad and includes many low-paying jobs in the retail and hospitality industries.
Current BLS numbers are estimates and the final numbers subject to revision, a process that resulted in lower final numbers in four of the last five years, EPI also noted. In a statement reporting the January and 2005 numbers, BLS commissioner Kathleen P. Utgoff noted that year-end "benchmark revisions" have been off by an average of two-tenths of a percent, or over 300,000 jobs per year.