Today’s unexpected and dramatic rise in private sector employment is clearly linked to the effectiveness of the PPP and other federally-funded re-payrolling initiatives.
NEW YORK (PRWEB) June 05, 2020
Following the release of the Employment Situation Report for May 2020 by the U.S. Bureau of Labor Statistics (BLS), the U.S. Private Sector Job Quality Index (JQI)® has been revised to a level of 81.31, up by 2.6% from its revised level one month earlier and reflecting a much lower proportion - relative to the prior month, and recent history - of U.S. production and non-supervisory (P&NS) jobs paying less than the mean weekly income of all P&NS jobs (“Low Quality Jobs”), relative to those jobs paying above such mean. The JQI is being heavily and uncharacteristically impacted by the unprecedented loss of over 15.3 million production and non-supervisory jobs (14.5% of all such jobs) since the beginning of the economic lockdown related to the COVID19 global pandemic (net of additions in May), with regard to which the following additional special factors should be noted:
- the BLS Employment Situation Report for May reflected a rise in private payroll employment, likely resulting from “re-payrolling” of employees via funding through the Payroll Protection Program (PPP) established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act);
- the PPP and other government household income substitution programs have likely only temporarily increased private payrolls – the sustainability of which will be dependent upon the effectiveness of U.S. economic reopening, as PPP payroll benefits only cover eight weeks of same;
- the payroll gains, as reflected in JQ-Instant™ reading, below, were heavily concentrated in sectors offering Low Quality Jobs, indicating the PPPs success in restoring incomes to workers in those sectors; and
- the JQI may rise or fall for a period of time to the extent that such large numbers of Low Quality Jobs have been substantially eliminated or restored (temporarily or otherwise), as offset by the significantly higher benchmark mean weekly income used in computing the index.
The mean weekly wage income of all P&NS jobs as of the current reading (which reflects the level as of April 2020) jumped to $840.50, an unprecedented change of +4.70% from its revised level the month prior. The JQ-Instant™ preliminary read of the unexpected 2.5 million gain in all private sector, non-farm payrolls for May 2020 shows that approximately 83.47% of the gains in private sector jobs were in industry sectors offering P&NS jobs with an average weekly income below the mean weekly income of all P&NS jobs (i.e. “Low Quality Jobs”).
The JQ-Instant read shows that re-payrolling through mid-May resulted in gains in Low Quality Jobs in retail, leisure and hospitality, offices of dentists and offices of physicians, all apparently the result of PPP-driven, and other, income substitution.
Daniel Alpert, co-creator of the U.S. Private Sector Job Quality Index, said, “Today’s unexpected and dramatic rise in private sector employment is clearly linked to the effectiveness of the PPP and other federally-funded re-payrolling initiatives. We can see that clearly by the huge increase in payrolls in low-wage/low-hours service sectors, about which we know businesses remained shuttered in May.”
For an explanatory video on the JQI, please see: http://www.vimeo.com/jqi.
This news release presents data from the most recent JQI reading calculated through the month immediately prior to the month covered by this release. The JQI assesses job quality in the United States by measuring desirable higher-wage/higher-hour jobs versus lower-wage/lower-hour jobs. The JQI offers a near-real time analytical tool to policymakers, researchers and financial market participants with relevance to a variety of trends in the economy at large. The JQI analyzes a representative sample of the economy using production and non-supervisory job (P&NS) data from 180 different industry groups spanning across all 20 super-sectors into which the BLS groups establishments. The principal data utilized is contained in the Current Employment Survey (CES, also often referred to as the establishment survey) P&NS data on average weekly hours, average hourly wage and total employment for each given industry group (seasonally adjusted, in all cases). The JQI is updated on a monthly basis contemporaneously with the release of new CES data from the BLS.
The JQ-Instant reading is for the month covered by this release and has implications for the likely direction of the JQI itself in future months. As the JQI is reported as a three-month rolling average of actual monthly readings, significant imbalances (readings varying from an even distribution between high and low quality jobs) in the JQ-Instant results would suggest future JQI readings moving in the direction of the dominant side of such distribution.
The U.S. Private Sector Job Quality Index (patent pending) is a joint development of the Program on the Law and Regulation of Financial Institutions and Markets at the Jack G. Clarke Institute of Cornell Law School, the University of Missouri Kansas City Department of Economics, the Coalition for a Prosperous America, and the Global Institute for Sustainable Prosperity.
For more information, and to read the full report, visit https://www.jobqualityindex.com/.
©2020 JQI IP Holdings LLC. “Private Sector Job Quality Index” and “JQI” are registered trademarks of JQI IP Holdings LLC. The Private Sector Job Quality Index is patent pending, application number US 62/900,923. Cornell logo and Cornell Law School and Jack G. Clarke Program names and references used with permission.