AS noted previously, the national jobs report was released this morning by the Bureau of Labor Statistics. Overall, the jobs report was positive, with the economy creating 288,000 jobs; well above projections of roughly 210,000. This was the fifth consecutive month of job creation above 200,000, the first time that has happened since the tech boom years of the 1990s.
However, before we think that this jobs report suggests we are back to the halcyon days of the 1990s, there were several things in the report that dampens the encouragement of the
Job creation was up . . . a lot. Of course, much of that jobs creation was due to a rise in part-time work with a reduction in full-time employment:
However, month to month data is highly volatile, and looking at the year over year changes reveals that full-time work has not been driving job growth as part-time work has flat-lined over the past year:
What is important to note vis-a-vis part-time work is in regards to Obamacare. The usual narrative is that Obamacare is driving the elevated levels of part-time work. However, part-time work is disaggregated into two sub-fields; voluntary and involuntary. If Obamacare were driving part-time work, then we should see a rise in involuntary part-time work. We aren’t:
Also, part-time work as a percentage of total employment is coming down to historical trends, with part-time work for economic reasons as a percentage of total employment down to the trends of the Regan years:
Further, job gains were broad based across industries, including state and local governments which had been battered during the recession and subsequent recovery. (There is a caveat to this; although most sectors experienced job gains, with services sectors gaining 236,000 jobs. This does entail low paying retail and food/restaurant jobs, but also higher paying business and professional services. As noted below, wages tempers encouragement about broad based job growth).
Lastly, the U-6 rate (considered the “true” unemployment rate by some) continued to decline, down to 12.1%, the lowest since late 2008.
As Ben Casselman notes, the unemployed are dropping out of the laborforce rather than finding work. Earlier this year he wrote a piece suggesting that there are some 4 million workers missing from the laborforce. The Economic Policy Institute puts that number closer to 6 million.
Further, while the number of long-term unemployed (27 weeks or more) continues to decline, it is still at extremely high levels:
Also, the labor force participation rate and employment population rates remained constant and below long-term trends. While there is a debate about how much these two metrics are being impacted by boomers retiring, there is still a huge cyclical component suggesting that the labor market is still weak.
Wages. The ugliness is not really about this particular report, but the state of the labor market overall. Wages grew at roughly the same pace as inflation, meaning that in real terms they were flat. This is not bad per se, but given that job growth has accelerated over the past several months, the fact that wages have not budged indicates just how much slack there is in the labor market.
The average hourly earnings of production and non-supervisory workers has risen at a 2.3 percent rate over the last year, compared to an increase of 2.0 percent for all workers. This continues a pattern in wage growth that we have seen throughout the recovery with wages of production workers rising more rapidly than wages of supervisory workers, who tend to be better educated.
What’s very interesting about these trends is that it challenges an argument often made in Maine and nationally; there is a skills gap that needs to be resolved by increasing college enrollments. As Baker writes:
While this might seem to conflict with recent reports showing the gap in wages between college educated and non-college educated workers hitting new highs, these two developments are easily reconciled when we recognize that college-educated workers are increasingly working at jobs that don’t require a college degree. A larger share of college-educated workers is now showing up in the production worker group, crowding out workers with less education. This is the opposite of the skills gap story, although it may still mean that there are good returns for workers getting college degrees.