Rise in higher-paying jobs lighting U.S. economy

Job growth last month shifted to higher-paying positions in a sign of a broadening labor market recovery.

Professional and business services, construction and health care led the solid 223,000 job gains reported by the Labor Department on Friday. Retail and leisure and hospitality lagged. Both have been engines of payroll gains through most of the U.S. employment upswing since 2010.

"We're seeing more quality jobs," says Diane Swonk, chief economist of Mesirow Financial. The trend, she says, partly reflects a widening recovery that includes a pickup in full-time positions.

Professional and business services added 62,000 jobs in April, with strong advances in computer systems design, management and technical consulting, and architectural and engineering services.

The construction industry added 45,000 jobs, the most in 15 months, and its payrolls are up 4.6% the past 12 months, compared to a 2.2% rise for total U.S. employment. Average hourly earnings in the sector are $27.28 — $2.41 higher than the average for all private-sector workers.

Although single-family housing starts have been sluggish, spending on multifamily building was up 27% in the first quarter, says Ken Simonson, chief economist of trade group Associated General Contractors. Office construction is also up sharply as companies consolidate locations and renovate, he says. And strong car and truck sales have prompted many manufacturers to build or expand factories.

Contractors shed 2 million workers in the recession. But in April, the number of unemployed construction workers looking for jobs hit a 10-year low of 652,000, down from 796,000 a year ago. Simonson predicts construction firms will add about 325,000 jobs this year, roughly matching 2014's strong gains.

Health care is also hiring at a brisker pace after cost efficiencies linked to the Affordable Care Act slowed growth in 2013 and part of 2014, says economist Sophia Koropeckyj of Moody's Analytics. Many providers have adjusted to the new law, she says. And the legislation is adding millions of new customers to coverage rolls.

The health care industry added 226,000 jobs the past six months, up from 164,000 the previous six months.

Retail, meanwhile, added just 12,100 jobs in April, less than half the average of the previous three months. Leisure and hospitality added 17,000 and the sector's average monthly additions of 24,000 so far this year are well below last year's 40,000.

Economist Dean Baker of the Center for Economic and Policy Research cautions against drawing conclusions from this year's small sample of leisure and hospitality payrolls, which are likely skewed by harsh weather.

Swonk says large numbers of low-paying, part-time jobs in the restaurant and retail sectors are still needed, especially to provide entry-level work experiences for teens.