(Analysis) Today’s employment report from the ADP Research Institute continues to show that private-sector employment is still below pre-recessionary levels, four years after the accepted end of the recession of 2008-9. This measure of lackluster economic performance does not even factor in an increase to the US population since the recession.
While employment by service-providing industries has risen to a level higher than before the recession – new hiring is occurring in low-wage industries like temporary agencies, leisure & hospitality, and retail – employment by goods-producing industries continues to exhibit its long-term trend of decline. The overall rate of change to the level of private-sector employment seems to have peaked in early 2012, and it is highly uncertain whether or not it will come back to these higher rates, which are crucial to putting the US economy back on anything like a sure footing. Exactly why the US economy – with an oft-cited comparative advantage in high-skilled labor – is becoming more specialized in low-skilled industries, is an unanswered question.
These continuing, worrisome trends in employment are contributing to falling real wages and growing inequality in the US, as employment increasingly shifts to low-skilled and low-paying industries and “rentier” income shows no sign of falling off. The private sector is failing to generate stable, equitable economic growth, and policymakers show no inclination to take any meaningful action. Unfortunately, expect more of the same for some time to come.