US Job Market Finishes 2018 Strong, but Talent Challenges Remain

US Job Market Finishes 2018 Strong, but Talent Challenges Remain

The US jobs numbers for December, released by the Bureau of Labor Statistics on Friday, exceeded expectations by a wide margin with the economy adding 312,000 jobs last month, while figures from October and November were revised upward by a combined total of 58,000. It was the best month of job growth since February 2018, when 324,000 jobs were created. Economists surveyed by Dow Jones had forecast just around 176,000 new jobs, according to CNBC.

The unemployment rate increased slightly from 3.7 to 3.9 percent in December, but for a good reason: not because workers lost their jobs, but rather because 419,000 new job seekers entered the labor force. The unemployment rate has fallen from 4.1 percent since December 2017, while the workforce expanded by nearly 2.6 million people. With the final report for the year, the US added an average of 220,000 jobs a month in 2018. Wages also grew in December by 0.4 percent over the previous month and 3.2 percent over the previous year, tying with October for the best year-over-year increase since April 2009 and indicating that the tight labor market is finally leading to higher pay for US employees.

“It appears that higher wages are the reason why people are returning to the active labor force in large numbers,” Paul Ashworth, chief US Economist with Capital Economics, commented to CNN, adding that wage growth might spook investors by suggesting that the Federal Reserve would proceed with its planned schedule of interest rate hikes this year. Ashworth added in a note reported by CNBC that the big jump in jobs “would seem to make a mockery of market fears of an impending recession,” while Jim Baird, chief investment officer for Plante Moran Financial Advisors, told the network: “Employers, it would seem, didn’t get the memo from Mr. Market that it’s time to tighten their belts.”

Nonetheless, the robust jobs report comes amid market jitters over the possibility of an overheated economy, missed earnings projections from some major US companies, and concerns about the domestic impact of President Donald Trump’s trade policies toward China. In remarks after the report was released on Friday, Fed Chairman Jerome Powell said the central bank was prepared to adjust monetary policy in response to changing economic conditions, meaning it could ease up on raising interest rates if the economy shows signs of trouble. Powell described the jobs report as encouraging, saying the rise in wages “does not raise concerns about too-high inflation” and would not prompt the Fed to accelerate rate increases, the New York Times reported.

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April Jobs Report: US Unemployment Fell Below 4% for First Time Since 2000

April Jobs Report: US Unemployment Fell Below 4% for First Time Since 2000

Unemployment across the US fell to 3.9 percent last month, its lowest level since December 2000, the latest jobs report from the Bureau of Labor Statistics showed, as the economy added 164,000 jobs. The increase in jobs was below the average monthly gain of 191,000 over the prior 12 months and the median estimate of 193,000 provided by economists to Bloomberg. However, job gains from the previous two months were also revised upward by a net 30,000 jobs. A broader measure of unemployment, including those marginally attached to the labor force or employed part time for economic reasons, fell from 8 percent in March to 7.8 percent in April.

Wage growth remained slow, however, with average hourly earnings rising 4 cents to $26.84, representing a 2.6 percent year-over-year-increase. That figure has dwindled from 2.9 percent in January, dampening hopes that the tight labor market would finally lead to accelerating wage growth for American workers. Nonetheless, Josh Wright, Chief Economist at iCIMS, tells the Washington Post that it’s “an exciting headline for the worker”:

“A real Goldilocks number, with job growth being great.” But pay stayed flat, so the Federal Reserve won’t likely feel pressure to raise rates before June. In other words, Wright said, the markets should respond favorably. “What we’re seeing here is steadiness,” he said. …

If the expansion further gains steam, analysts at the Fed said the unemployment rate could reach 3.7 percent this year, a figure not seen since 1969.

Also, the New York Times points out, “A year-over-year increase of 3 percent in hourly earnings is considered the trip wire that could prompt the Federal Reserve to raise its benchmark interest rate more aggressively than it has signaled”:

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US Economy Added 2.1 Million Jobs in 2017

US Economy Added 2.1 Million Jobs in 2017

US employers added 148,000 jobs in December for a total increase of 2.1 million jobs across last year, according to the latest employment data released by the Bureau of Labor Statistics on Friday. The monthly figure, while still reflecting a strong labor market, was considerably lower than the revised totals of 252,000 and 211,000 jobs added in November and October, respectively. Figures for these months were revised downward by a total of 9,000 in Friday’s BLS report. The annual increase was slightly below the 2.2 million jobs added in 2016. The greatest job gains last year came in the health care, construction, food service, and manufacturing sectors, whereas retail employment declined by 67,000.

The unemployment rate held steady at 4.1 percent, remaining at its lowest level since December 2000 for the third month running. The total number of Americans employed part-time who would prefer full-time work was “essentially unchanged” at 4.9 million in December but down 639,000 for 2017, while the number of long-term unemployed fell by 354,000 over the course of the year to 1.5 million last month. Average hourly earnings rose by 65 cents, or 2.5 percent, over the year.

Economists’ views of what this portends for the coming year differ, based partly on how much impact they think the household and corporate tax cuts passed by Congress last month will have on hiring and consumer spending. “The pace of job creation in 2017 suggests the expansion may have more room to run eight and a half years after the most recent recession ended,” the Wall Street Journal’s Eric Morath writes, while the tax cuts could “turbocharge growth,” as Joseph Brusuelas, chief economist at consulting firm RSM US, puts it. Glassdoor’s chief economist Andrew Chamberlain takes a different view:

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Fed Study: Discrimination Is Causing Growth in the US Racial Pay Gap

Fed Study: Discrimination Is Causing Growth in the US Racial Pay Gap

Last year, an alarming report from the left-leaning Economic Policy Institute found that the gap in income between black and white Americans had grown from 1979 to 2015, with black men earning 22.0 percent less, and black women making 34.2 percent less, than white men with the same education, experience, and geographical location. A new study by the Federal Reserve Bank of San Francisco confirms that finding, showing that the black-white wage gap has been growing and furthermore, that economic factors do not explain why.

The hourly wage ratio of the average black male to his white male counterpart shrank from 80 percent in 1979 to 70 percent in 2016, the San Francisco Fed finds. Black women earned 95 percent of what white women made in 1979, but that has gone down to 82 percent in 2016. While some of the gap can be explained by attributes such as location, education, working hours, job type, etc., the reason for its growth is less tied to those factors and economists are struggling to explain the increase. The Fed says this “implies that factors that are harder to measure—such as discrimination, differences in school quality, or differences in career opportunities—are likely to be playing a role in the persistence and widening of these gaps over time.” Eshe Nelson at Quartz adds:

In fact, additional research by the San Francisco Fed showed that black people with bachelor’s degrees saw the earnings gap with their white counterparts increase by more than for high-school graduates. … Ultimately, it seems that discrimination—whether in the “unexplained” category, or more structural racial bias that exists in educational systems and elsewhere—is widening the disparity in wages between black and white workers. Time alone will not close this gap, researchers conclude. … time seems to be making it worse.

One factor that may also account for the recent rise is that black workers are hit harder by recessions and recover more slowly than the rest of the labor market. It’s very likely that the cumulative effect of the recessions of 1987 and the late 2000s reversed, or even worsened, any progress made from the late 1960s to the early 80s. Bloomberg’s Jeanna Smialek and Jordyn Holman idenfity why this is such a problem:

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US Hiring Slows and Unemployment Ticks Upward in August’s Jobs Report

US Hiring Slows and Unemployment Ticks Upward in August’s Jobs Report

The US labor market continues to grow, but hiring slowed slightly in August, with employers adding 156,000 new jobs and the unemployment rate increasing slightly from 4.3 to 4.4 percent, according to the Labor Department’s monthly jobs report. The Associated Press examines the numbers:

Job growth in June and July was revised down by a combined 41,000, leaving an average monthly gain this year of a solid 176,000. Taken as a whole, Friday’s jobs report pointed to an economy that is still steadily generating jobs, though at a slower pace than it did earlier in the recovery from the recession. With fewer people looking for work, fewer jobs are being filled.

One persistent soft spot in the job market is that pay raises remain tepid. Average hourly pay rose just 2.5 percent over the 12 months that ended in August. Wage growth typically averages 3.5 percent to 4 percent annually when unemployment is this low. … Overall, hiring this year has averaged 176,000 a month, roughly in line with 2016’s average of 187,000. August was the 83rd straight month of job gains.

The report does not account for the economic impact of Hurricane Harvey, which came too late in the month to be reflected in the Labor Department’s surveys. Economists tell the AP the effects of the disaster will likely be visible in the months to come, with job growth first weakening and then rebounding as workers who were temporarily laid off are rehired.

Overall, August’s job numbers undershot economists’ expectations, CNBC’s Jeff Cox reports, but not enough to cause concern:

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US Job Gains Slow in May, but Unemployment Falls to 16-Year Low

US Job Gains Slow in May, but Unemployment Falls to 16-Year Low

US nonfarm payrolls increased by just 138,000 last month and job creation numbers from March and April were revised downward by 66,000, but the unemployment rate fell to a 16-year low of 4.3 percent, according to the latest statistics from the Labor Department. Reuters has the details:

May’s job gains marked a sharp deceleration from the 181,000 monthly average over the past 12 months. Job growth is slowing as the labor market nears full employment. Last month’s job gains could still be sufficient for the Federal Reserve to raise interest rates this month. … The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate fell one-tenth of a percentage point to its lowest level since May 2001. It has dropped five-tenths of a percentage point this year. Last month’s decline came as people left the labor force. The survey of households from which the jobless rate is derived also showed a drop in employment.

The new jobs report comes less than two weeks before the Federal Reserve’s next policy meeting, when they will decide whether to raise the central bank’s benchmark interest rate. Observers say the Fed is likely to remain on course to raise rates again, despite the dip in job creation. But there is some disagreement among economists over whether this report indicates that the economy is slowing down or merely reflects a bump in the road, according to CNN Money:

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January’s BLS Report: Strong on Jobs, Weak on Wages

January’s BLS Report: Strong on Jobs, Weak on Wages

The US economy added 227,000 jobs in January, significantly outperforming predictions, but unemployment ticked up to 4.8 percent and average hourly earnings rising only 3 cents, the Bureau of Labor Statistics reported on Friday. Job growth was strongest in the retail, construction, and financial sectors, each of which added tens of thousands of positions. The number of full-time jobs rose by 457,000 to 124.7 million, while part-time jobs fell by 490,000 to 27.4 million, according to the BLS’s household survey, and the labor force participation rate rose by 0.2 percentage points to 62.9 percent.

While job growth remained robust in the last month of the Obama administration, the stagnant wage figure may give the Federal Reserve cause to think twice before raising interest rates, Yahoo Finance’s Myles Udland observes:

Following Friday’s report, Neil Dutta, an economist at Renaissance Macro said, “[The] Fed has no need to rush. Participation rate rose and hourly earnings were soft but workweek extended and jobs rose nicely.”

The uptick in the labor force participation rate is, aside from the headline job gains, perhaps the most positive part of this report, as it indicates folks who had likely been completely done looking for work again sought to come back into the labor force. This broadly squares with improving consumer and business sentiment readings we’ve seen since the election, as taking the leap of faith to move from not looking for work at all to attempting to find a job requires some level of confidence about the economy.

Rising employment figures may look like good news for the recently inaugurated President Donald Trump, but Business Insider‘s Elena Holodny points out that this report does not reflect anything that has happened since Trump was inaugurated:

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