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U.S. Economy Continues To Add Jobs, But Some High-Paying Industries Lag

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UNEMPLOYMENT

NEW YORK -- With Friday's relatively encouraging unemployment data, the United States has officially added to its workforce for 14 consecutive months. Unfortunately, economists say, the nation may not be adding a broad enough range of the kinds of high-wage jobs needed to solidify economic recovery.

In April, the U.S. economy added 244,000 jobs -- the third straight month to see an average of over 200,000 new positions created, according to new data from the Bureau of Labor Statistics. While state and local governments continued to cut back, private employers added 268,000 jobs, the largest monthly gain since February 2006. The unemployment rate edged up to 9.0 percent from 8.8 percent in March, however, the first increase since last November.

Amid signs of a stagnating economy -- a weakening gross domestic product, slowing growth in the manufacturing sector, a spike in claims for unemployment insurance -- economists wonder if the labor market is really as strong as the gain in private-sector jobs suggests.

"Today's numbers seems a bit out of place with all the other economic reports that consistently portray an economy that is breathing hard, an economy that is losing steam," said Bernard Baumohl, chief global economist at The Economic Outlook Group. "So you have to ask yourself, 'What's going on here?' This is probably going to be one of the strongest numbers of the year and in subsequent months we'll see hiring being scaled back."

The monthly Bureau of Labor Statistics report is composed from two different sources -- the household employment survey, which is measured by contacting American workers, and payroll employment as reported by employers. When payroll numbers and the unemployment rate appear to be moving in the opposite direction from each other, economists say: look at the trends.

The trends show a labor market still struggling on a number of fronts, particularly in the creation of higher-wage positions in some key sectors. Employment in information and financial services, construction, and transportation and warehousing changed little in April. Manufacturing has been a bright spot of the recovery, but the rate of growth has slowed over the past two months. The professional and business services, health care and leisure and hospitality sectors continued to increase employment, however.

The biggest industry jump in April, though, was in the retail sector, which added 57,000 new positions. Retail has consistently been one of the biggest winners since the recession, but the sector's average hourly wage was only $9.03 as of 2010.

Despite private employers' best month of job creation in five years, the economy has yet to see a big uptick in wages. In April, the average workweek remained static at at 34.3 hours, while average hourly earnings only increased by 3 cents, or 0.1 percent. During the past 12 months, average hourly earnings only increased by 1.9 percent.

Economists said this trend should begin to improve with the broader unemployment numbers, though they cautioned that significant wage increases are unlikely to arrive in the near future.

"If you continue to get these kind of reports -- 244,000 new jobs -- the laws of supply and demand start to take hold and wages will go up. You start to get a shift in the power of the labor market from employers to workers," said William M. Rodgers III is Professor of Public Policy and chief economist at the Heldrich Center for Workforce Development at Rutgers University. "But until you get the unemployment rate in the 6 percent range, until you get there, you're not going to see much upward pressure on wages."

The financial services sector and the housing market propelled much of the economy's growth before those bubbles popped and the recession hit. In Rodgers' view, the missing piece of the puzzle remains a new high-paying industry to lead the economy's drive forward.

"We've seen an average of 130,000 jobs a month over the last 15 months and that's leading to a kind of bifurcated recovery. Only those at the top of the job ladder are starting to see good opportunities, while those at the bottom and the middle of the ladder, they're still faced with some major challenges," he said. "This is a report to build on. We need many, many, many more reports like this, where you're seeing strong job creation such that we'll move out of the bifurcated recovery and that opportunity will be more broadly based."

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