WSJ Blogs

Real Time Economics
Economic insight and analysis from The Wall Street Journal.
  • Apr 1, 2011
    3:12 PM

    Women’s Earnings Are Stagnating

    Women’s earnings have stagnated in the last few years after decades of wage gains, a new analysis shows.

    Earnings among women have largely been tracking up since the mid-1960s, helped along by more women participating in the labor force and attaining higher levels of education. But the shifts that have caused men’s wages to stagnate in recent decades appear to have ensnared women as well, according to the Hamilton Project’s Michael Greenstone and Adam Looney.

    Females’ median earnings have risen nearly 56% since 1963, adjusted for inflation. But their wages have stagnated since about 2001.

    That’s partly the impact of fewer prime-age women, between the ages of 25 and 64, working, according to the researchers. Women may also be impacted by the global competition and advances in technology that have whittled away at men’s wages.

  • Apr 1, 2011
    1:06 PM

    More Jobs Doesn’t Necessarily Mean More Good Jobs

    The U.S. economy is producing jobs, that much is clear. But whether those jobs are good jobs is less certain.

    Of the 230,000 private-sector jobs created in March, 199,000 of those were in the service sector. A large chunk of those jobs are in fields that are likely to provide a stable livelihood for those lucky enough to snag them – like some of the 78,000 added in professional and business services. But that’s less certain for, say, the 37,000 new workers in the leisure and hospitality industry.

    To be sure, having a job is better than not having one, both for the individual and for economic output. But this recovery seems to be going hand-in-hand with workers taking lower-paying jobs. More than half of those full-time workers who lost jobs between 2007 and 2009 and then found full-time work by early last year said their new jobs came with lower wages. Some 36% saw a pay cut of 20% or more.

    That can be good news for companies, who are able to keep their labor costs low and hire talented workers, which can increase productivity. The flipside: it can downshift Americans’ spending and their standard of living.

  • Apr 1, 2011
    11:51 AM

    Economists React: Upside Potential for Jobs Is ‘Tangible’

    Economists and others weigh in on the jump in U.S. payrolls and the drop in the unemployment rate.

    This month’s nonfarm payroll additions are likely to engender further optimism around the U.S. labor market. The upside potential is now tangible. –Jason Schenker, Prestige Economics

    Three sectors — health care (+45,000), leisure (+37,000), temp help (+29,000) — accounted for more than half of the payroll growth seen in March. The latter two are relatively low wage sectors, which is one of the reasons that average hourly earnings were held down in March. The household survey continues to show stronger job gains than the establishment survey. On a payroll-adjusted basis, the household survey shows employment up a whopping 311,000 per month since November. So, of the 1.0 percentage point decline in the unemployment rate seen over the past four months — about 0.8 percentage points is due to rising employment and the rest is due to a contraction in the labor force. –David Greenlaw, Morgan Stanley

    Job gains were widespread across most sectors. That said, more than 40% of the additional jobs over the last three months were created in only two sectors: education & health and in leisure & hospitality. –Harm Bandholz, Unicredit

    Unlike February when the 200,000-plus gain in payrolls was attributed largely to bounce-back from January’s weather-induced losses, no such distortion occurred in March. Even industries likely to suffer from higher gasoline prices, such as retail trade and leisure/hospitality, added a respectable number of jobs in March. Public sector employment continues to decline as state and local governments struggle to balance budgets. These cuts seem to be winding down, however, as states see tax revenues rise again. State government payrolls were unchanged in March, while losses on the local level have diminished. –Sophia Koropeckyj, Moody’s Economy.com

  • Apr 1, 2011
    10:55 AM

    Eight Years to Get Back to Full Employment?

    The payroll gains in March were good. But we’d need eight years of consistent monthly gains just like that — taking us to the year 2019 — to bring the economy back to full employment.

    The labor market lost almost 8.8 million jobs from the peak for payrolls in January 2008 (138 million payroll jobs, when the unemployment rate was 5%) to the trough in February 2010 (129.2 million). Since then, the U.S. has added 1.5 million jobs.

    If the March gain of 216,000 jobs were to continue, payrolls would return to their peak in 34 months — early 2014.

    But the economy also needs to add at least 100,000 jobs a month just to keep pace with long-run growth in the labor force. That brings us to early 2019 under March’s pace for payroll gains.

  • Apr 1, 2011
    10:08 AM

    Fed’s Dudley Warns Against Prematurely Tightening Policy

    A key Federal Reserve official warned Friday against moving prematurely to tighten monetary policy, saying as far as the U.S. economy has come, the recovery process remains “tenuous.”

    “A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking” and have been expecting at the central bank, Federal Reserve Bank of New York President William Dudley said. “This is welcome and not a reason to reverse course.”

    Dudley’s comments came from the text of a speech he was to present before the E-3 Summit of the Americas trade forum. He spoke in the wake of the release of solid hiring data for March, and as a number of other Fed officials have been arguing the Fed is getting close to the time it will need to tighten monetary policy. Dudley is the vice chairman of the monetary-policy-setting Federal Open Market Committee, and shares with Fed Chairman Ben Bernanke the belief that the economy still needs considerable support from the Fed. He has been a staunch advocate of the central bank’s $600 billion bond-buying program.

    Other Fed officials have been worried by rising food and energy prices, and believe with a recovering economy, it may soon be time for the Fed to move toward tighter policy. Dudley countered “it is important to emphasize that we at the Federal Reserve have been expecting the economy to strengthen.” He added “we must not be overly optimistic about the growth outlook” because the economy is still working to recover from the events of the last few years.

  • Apr 1, 2011
    9:41 AM

    Hidden Bad Signs in a Good Jobs Report

    There was lots of good news in Friday’s jobs report, but there are still some caveats to keep in mind. Overall the economy added 216,000 jobs in March, and the unemployment rate dropped to 8.8%. The gain in jobs was relatively broad-based, though with some sectors still lagging. Meanwhile, the unemployment rate improvement was based on more people working, not just discouraged workers dropping out of the labor force. In fact, the labor force rose more than the general population, indicating the market has improved enough to draw some of the unemployed back into the pool of workers. But the jobs report is a lagging indicator, and some of the issues that have led economists to scale back growth forecasts for this year aren’t yet reflected in this report. One potential area of difficulty is disruptions in manufacturing supply chains caused by the Japanese earthquake, the ripple effects of which might not be felt for weeks or months. Manufacturing added jobs in March, but there might be some difficulties ahead.

  • Apr 1, 2011
    5:00 AM

    The Missing Sense of Urgency for Jobs

    The March jobs report, to be released at 8:30 a.m. Eastern time, will provide the latest clue toward answering a nagging question: When will the recovery start generating enough jobs to make a lasting dent in unemployment?

    Economists expect the Labor Department to report that nonfarm payrolls increased by 195,000 in March. That would bring the three-month average to 150,000 — an improvement over the recent past, but still just barely more than the 100,000 or so needed every month to keep up with natural growth in the labor force and hold the unemployment rate steady at February’s 8.9%.

    The March jobs number will provide a glimpse of how company executives are dealing with new uncertainties, from the potential impact of rising energy prices and turmoil in the Middle East to the effects of the earthquake, tsunami and nuclear disaster in Japan.

    Jeff Joerres, chief executive of ManpowerGroup, says he hasn’t seen employers as a whole pulling back. On the contrary, while he isn’t expecting a hiring boom, he sees companies reaching the limits of their ability to get more output from the workers they have. That, he believes, means that a little growth in demand will start to generate stronger hiring.

  • Mar 31, 2011
    8:01 PM

    Saudi Government’s Break-Even Oil Price Rises $20 In A Year

    Another reason to brace for higher oil prices in coming years: big oil exporters are increasingly dependent on the income.

    Saudi Arabia, due to higher government spending this year, will need its oil to sell for $88 a barrel in 2011 for its government to break even — up from $68 last year, according to a new estimate from the Institute of International Finance, a global bankers’ trade group.

    The kingdom, in response to the unrest spreading throughout the Middle East and North Africa, is boosting government spending to provide new social benefits for its people. The support for housing units, unemployment benefits and wage hikes for public workers (among a long list of measures) will contribute to a 31% increase in government spending in 2011 from a year earlier.

    “A significant portion of the increase in spending is likely to be irreversible,” the IIF said in a research note.

    Saudi Arabia, the world’s largest oil producer, gets more than four-fifths of its government revenue from the petroleum sector. Under an average price for Brent oil of $110 per barrel, equal to about $108 a barrel for Saudi crude, the Saudi government would still maintain a surplus of 6.7% in 2011. (Brent crude closed Thursday well above that point: $117.36 per barrel, more than $10 above the $106.72 for light, sweet crude oil on the New York Mercantile Exchange.)

    Saudi output accounts for about 10% of global oil supply. With most of the world’s spare production capacity, it influences the price of oil more than any other producer — and has taken on greater importance amid unrest in Libya, Egypt and other oil-producing countries.

    IIF estimates that the Saudis’ break-even oil price (to balance its budget) will rise to about $110 per barrel in 2015 from $88 this year.

About Real Time Economics

  • Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal’s Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com.

    Read more Economics coverage.

Partner Center
An Advertising Feature