The cold weather throughout the United States had an impact on the job numbers again, as employers added 175,000 new private jobs in January, below the expected 189,000, according to the ADP national employment report.
“Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue.” ~Marc Zandi, Chief Economist at Moody’s Analytics
The latest numbers from the Labor Department also concur that job growth was less than expected. The Bureau of Labor Services (BLS) Jobs Report stated that 113,000 jobs were added last month. However, the country’s unemployment rate slipped to 6.6 percent in January from 6.7 percent in a previous month, hitting a five-year low. However, the drop in unemployment this month is not due to people opting out of the workforce; the labor force participation rate rose this month to 63 percent.
The construction industry saw a drop of 22,000 jobs, while federal jobs lost 12,000 positions with the postal service accounting for 9,000. The biggest gains were in professional and business services (36,000 jobs added) and leisure and hospitality (24,000 jobs added).
Online job ads fell in January by 56,800 for a total of 5.2 million. According to June Shelp, Vice-President at The Conference Board, “employers still seem hesitant to expand their workforce.” However a survey by the SurePayroll Small Business Scorecard found that half of small businesses in the U.S. expect to hire for new positions in 2014.
Global Contingent Worker Spend
Global spend on contingent labor was $2.5 trillion in 2012, according to estimates by Staffing Industry Analysts. Independent contractors had the highest spend at $1.5 trillion.
Spend on Contingent Work Globally (numbers in billions)
Source: Staffing Industry Analysts
Wage Increase for Federal Contractors
On February 12th, 2014, U.S. President Barack Obama signed an executive order to increase minimum wages for federal contract workers to $10.10 per hour starting in 2015. The current rate is $7.25 an hour. This order applies to new contracts and replacements for expiring contracts. The President also urged employers nationwide to increase wages for their workers. The White House says that this move will benefit hundreds of thousands of people working under contracts with the federal government.
A report by the nonpartisan Congressional Budget Office says that raising the federal minimum wage would cause the loss of approximately 500,000 jobs but would boost earnings for about 16.5 million low-wage workers. However, the report does acknowledge that long-term conclusions on the effect of the minimum wage are difficult to predict.
“Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who become jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly” ~ Congressional Budget Office
Stay posted for a more in-depth analysis of this topic in the April edition of TrendLine!