Falling Unemployment Rate Not Always Good News

The Bureau of Labor Statistics (BLS) released their August jobs report today and the news is bittersweet. The national unemployment rate did fall to 8.1 percent (down from 8.3 percent last month), but the number of new jobs added was only 96,000. This number was far below the expectations of economists and the hopes of the Democratic Party.

To make matters worse, the falling unemployment rate wasn't due to fewer unemployed workers, but rather to more discouraged workers dropping out of the labor force because they felt there were no jobs for them.

Nonetheless, the news isn't bad for everyone. There were sectors where employment increased, such as professional and technical services and health care. These sectors coincide well with what we observe in The PayScale Index -- industries that experienced significant increases in pay last quarter (Q2) were also ones that added a relatively large number of jobs in August.

For example, professional and technical services added 26,800 jobs last month and about half of these new jobs came from the computer systems design and related services industry. In comparison, wages for both IT jobs and the professional and tech industry grew by 1.8 percent in Q2 (compared to only 1.2 percent nationally).

Health care is an industry that has suffered little relative to other industries over the last few years. During the Great Recession, when national wages fell by almost 2 percent, wages in health care dropped a measly 0.5 percent and then started to grow again in the latter half of 2010, which was earlier than most other industries. In fact, health care has had the best wage growth since 2006 (the base year) of all job families measured by The PayScale Index -- 9.4 percent compared to 6.5 percent nationally.

Similar to the strong wage growth, employment has also performed well in this sector, rising consistently over the last few months and finishing August off with the addition of 16,700 new jobs. As another example of good news for employment in this sector, the BLS projects the health care industry will add 5.6 million more jobs by 2020.

One other sector that saw a large increase in employment was food services and drinking places, which added 28,000 jobs in August. Employment growth in this sector isn't always a good sign, however, as this is a sector often flooded with underemployed workers. Underemployed workers fall into two general groups: 1) those that are desperate for work, but unable to find jobs that utilize their skills and education and 2) those that desire full-time work, but can only find part-time work. Working at a fast food counter or as a barista may be the only option for a desperate laborer.

Katie Bardaro is the lead economist and data analytics manager for PayScale.com

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