April’s payrolls report painted a bleak picture for wage growth in America. We continue to add low-skill, low paying service jobs as opposed to higher skill, higher pay jobs like manufacturing.
In fact last month we added nearly 30 service jobs (restaurant / retail) for every manufacturing job.
Things have gotten so bad, many Americans have simply stopped looking for work. While the employment numbers can be claimed as ‘victories’ for the economy, the real story is that the unemployment rate is only dropping because the total pool of workers is shrinking faster.
Last month the number of Americans no longer in the labor force grew to 93,194K from 93,175K, meaning a participation rate of 69.45%. That’s the lowest since 1977.
This means a less confusing measure of unemployment, the civilian employment to population ratio, is unchanged from last month, stuck at 59.3%.
Which in turn implies that there will be no wage growth any time soon.
The signs of a truly healthy economy are rising level of employment combined with rising wages. Carefully looking at the numbers shows America has neither going on right now, which is cause for alarm.
The charts below, courtesy of ZeroHedge, show exactly the magnitude of the problem.