An analysis of recent labor market data shows that while the number of jobs created in early 2012 exceeds that of a year ago, the jobs added to U.S. payrolls paid less than those created in early 2011.
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In the first four months of fiscal year 2012, employment and withheld income tax reported by the U.S. Treasury were down $310 million from the same period a year earlier, according to statistics compiled by the Financial Management Survey, a division of the U.S. Treasury.
The falloff in tax withholdings occurred despite the addition of 144,000 more jobs to the U.S. economy in fiscal 2012 compared to the same four-month period in 2011.
The numbers compiled by FMS were drawn from data that use the fiscal year, which starts on October 1. The quality assessment analysis first appeared on the economic blog ZeroHedge.com.
In the 2012 fiscal period from October through January 31, the U.S. Treasury recorded employment and withheld income tax revenue of $592.676 billion, according to the FMS. In the comparable period in 2011, employee withholding taxes were $592.984 billion.
That’s where the loss of $310 million in tax withholdings occurred.
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Meanwhile, based on data from the U.S. Bureau of Labor Statistics, the U.S. added 715,000 jobs in the first four months of fiscal 2012, up from 571,000 during the same period a year earlier.
That’s a total of 144,000 more jobs added in early 2012 than in 2011.
Significantly in terms of the quality of the jobs being created during the current economic recovery, the data show that between Jan. 31, 2011, and Jan. 31, 2012, the U.S. added a total of 1,953,000 jobs. Yet, despite the economy adding nearly two million jobs during that period, tax withholdings are trending lower in 2012 compared to 2011.
According to the data, the 130.456 million workers employed at Jan. 31, 2011 created a total of $592.984 billion in withholdings, or an average of $4,545.48 per worker over the first four months of fiscal year 2011.
Meanwhile, the 132.409 million workers employed at Jan. 31, 2012 created a total of $592.676 billion in withholdings, or an average of $4,476.09 per worker.
Based on those figures, even as America was creating nearly two million jobs, the government tax revenues created by those jobs fell in 2012 compared with 2011 on a per-job basis by roughly 1.5%.
Economists believe the apparent decline in the quality of jobs (as determined by salary) is almost certainly acting as another obstacle to a robust recovery. That decline in job quality is made even more problematic given the rising cost of energy in the U.S.
As a result, U.S. workers have less take-home money to pay for rising gas prices and other expenses. In turn, that cuts into all-important consumer spending, which accounts for roughly 70% of the U.S. economy.