The U.S. Private Sector Job Quality Index (JQI) December 2020

Following the release of the Employment Situation Report for December 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 81.24, down by 0.91% from its revised level one month earlier and reflecting a higher proportion – relative to the prior month – 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.

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The JQI remains heavily impacted by the extraordinary disruption in the number and composition of private sector production and non-supervisory jobs since the beginning of the U.S. impact of the COVID19 global pandemic, with regard to which the following additional special factors should be noted:

1. The BLS Employment Situation Report for December reflects a 95,000 decline in private sector payrolls, finally reflecting the cumulative impact of the sustained historically high level of initial weekly claims for unemployment insurance benefits which itself is reflective of overall damage to employers as well as virus surges, colder weather and the elimination of pretty much all benefits to job creation arising from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the Payroll Protection Program (PPP) and the federal unemployment insurance benefit supplement, prior to the enactment of additional relief at the very end of 2020 (which had no impact on December results).

2. More workers in Low Quality jobs who were laid off during the peak crisis months, returning to their jobs starting in mid-year and through the fall, were again laid off in December. This will stall the JQI reversion back to its pre-pandemic, lower levels to the extent that those lower quality jobs continue to be lost over the winter; and

3. 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 since the elimination of large numbers of Low Quality Jobs.

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The mean weekly wage income of all P&NS jobs as of the current reading (which reflects the level as of November 2020) increased to 847.88, a change of 0.29% from its revised level the month prior. This reflects the continued absence (as a result of the pandemic) of the low-wage/low-hours positions that had grown substantially in number over the course of the past four years. The JQ-Instant™ preliminary read of the 95,000 loss in all private sector, non-farm payrolls for December 2020 shows that 100% of the losses 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”).

This reading was due to a very substantial loss of jobs in the leisure and hospitality sector – particularly in the restaurant industry – and the dramatic increase in the average weekly income for all P&NS jobs resulting from the elimination of millions of Low Quality Jobs during the COVID19 crisis, causing several marginal sectors to fall below the new average weekly income measure. This distortion will ultimately sort itself out during the course of this year.

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.

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