US Labor Market Bounces Back from Hurricanes

US Labor Market Bounces Back from Hurricanes

After a September jobs report marred by the impact of Hurricanes Harvey and Irma, October’s monthly data from the Bureau of Labor Statistics shows the US labor market rapidly rebounding from these disasters, with non-farm employment rising by a seasonally adjusted 261,000 last month. Although this did not meet economists’ expectations of 315,000 new jobs, it was a huge improvement from September. Figures for that month were also revised upward from 33,000 jobs lost to 18,000 jobs gained, meaning the US remains on a record 85-month job growth streak.

Unemployment fell to 4.1 percent, its lowest level since December 2000, but wage growth was stagnant at 2.4 percent year-over-year, a slowdown over the previous month. “With the swings from the hurricanes now largely behind us, the longer-term challenge of wage growth returns to the foreground,” Jed Kolko, chief economist at Indeed, commented to the Wall Street Journal.

The labor force participation rate also fell by 0.4 percentage points in October, to 62.7 percent, which suggests that even as the economy approaches nominally full employment, there remain many Americans who are neither working nor looking for work. Accordingly, re-engaging those labor force dropouts could become an increasingly important strategy for US organizations that want to expand their workforces in the current labor market.

“The bigger picture here is that the labor market’s fine,” Brett Ryan, an economist at Deutsche Bank, explains to the New York Times. Fine, however, is not necessarily great, as the labor force participation and wage figures suggest:

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Is the Opioid Epidemic Driving a Decline of the US Workforce?

Is the Opioid Epidemic Driving a Decline of the US Workforce?

In a paper last year on the disappearance of many prime-age men from the US workforce, Princeton economist Alan Krueger presented the unsettling finding that 44 percent of working-age men who were not in the labor force reported taking pain medication on a regular basis, and two-thirds of these men were taking prescription pain medication. While improvements in video game technology may be contributing to these men’s lower workforce participation by making long-term unemployment more bearable, Krueger wrote, their high rates of poor health and use of narcotic painkillers are much more disconcerting.

In the Fall 2017 edition of the Brookings Papers on Economic Activity, Krueger publishes an update of that research with new data, homing in on the impact of opioid epidemic on the labor market. That impact, he finds, is even more significant than previously thought, accounting for some 20 percent of the decrease in men’s labor force participation between 1999 and 2015, and 25 percent of the decrease among women, Brookings editor Fred Dews explains:

Krueger’s paper suggests that, though much of the decline can be attributed to an aging population and other trends that pre-date the Great Recession (for example, increased school enrollment of younger workers), an increase in opioid prescription rates might also play an important role in the decline, and undoubtedly compounds the problem as many people who are out of the labor force find it difficult to return to work because of reliance on pain medication.

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Has Women’s Share of the US Workforce Peaked?

Has Women’s Share of the US Workforce Peaked?

Poring over some recent projections from the Bureau of Labor Statistics, Pew researchers Richard Fry and Renee Stepler observe that American women’s share of the labor force is now expected to peak at 47.1 percent in 2025 before leveling off to 46.3 percent by 2060. After decades of rapid progress toward gender parity in the workforce, will women always be a minority there? Fry and Stepler discuss how women’s labor force participation has plateaued in recent years as part of an overall trend of much slower growth:

The steady growth in women’s labor force representation slowed in the 1990s as women’s participation peaked. Labor force participation declined for both men and women between 2000 and 2015, so the growth rates of the male and female labor force are now quite similar on average: 0.8% per year for women between 2000 and 2010, compared with 0.7% for men. (The labor force can grow in spite of falling labor force participation because the working-age population is increasing.)

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‘Solid’ US Jobs Numbers in September

‘Solid’ US Jobs Numbers in September

The US economy added 156,000 jobs in September, a decrease from 167,000 the previous month, the Bureau of Labor Statistics announced on Friday. The unemployment rate rose ever so slightly from 4.9 to 5 percent, and average hourly earnings rose six cents to $25.79, making for 2.6 percent wage growth over the past year. Speaking to the New York Times, Diane Swonk, an economist in Chicago, calls the report “solid, not spectacular”:

“The good news is that participation went up, even though the unemployment rate did, too. Regaining that ground is very important.”

Before the report, economists on Wall Street looked for the economy to add 172,000 jobs in September. Revisions for July and August showed that 7,000 fewer jobs were created in those months than the Labor Department first estimated. In the wake of these figures, the Federal Reserve is still expected to raise interest rates late this year, and there was little in the report to suggest that the job gains might lead to inflation.

“There are still plenty of unemployed people out there, enough for employers to continue to hire at a substantial pace,” said Michael Gapen, chief United States economist at Barclays. “The expansion will end before you run out of labor,” added Mr. Gapen, who estimates that the unemployment rate could drop to 4 percent by the end of 2017.

The marginal uptick in the unemployment rate could actually be a positive indicator, reflecting growth in the labor force as people who had dropped out of it entirely start looking for work again, the Wall Street Journal observes:

The labor force—the number of adults who hold jobs or are actively looking for them—grew by 444,000 last month and by slightly more than 3 million over the past year. The labor-force participation rate—the share of the overall population in the labor force—stood at 62.9% in September, up a tenth of a percentage point from August and a half-point from a year earlier. It is still hovering near the lowest level since the late 1970s, in part due to the retirement of baby boomers but also because many working-age Americans have given up the job search.

Even with the latest progress, millions of Americans are underemployed. The share of residents who are jobless, involuntarily stuck in part-time work or too discouraged to look for a job stood at 9.7% last month, unchanged from August, but down from 10% a year earlier.

Reuters deduces that the lackluster numbers may make the Fed more hesitant to raise interest rates too quickly:

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Can America Bring Back Its Missing Workers?

Can America Bring Back Its Missing Workers?

US Secretary of Labor Tom Perez is encouraged by last month’s solid jobs numbers, the Atlantic’s Bourree Lam reports. While job growth this year may not be as robust as last year, Perez believes that this slowdown represents the economy approaching full employment, and is now looking for signs of wage growth and greater labor force participation:

“We are seeing evidence in 2016 of that tradeoff that you frequently see as you’re getting closer and closer to full employment where the pace of job growth lessens, and the pace of wage growth hastens. I fully expect that total job growth in 2016 will be less than 2015, but it will also at the same time be ample to sustain the continuing recovery.” …

Wages have been growing; average hourly earnings have risen by 2.6 percent in the past year. But the labor-force participation rate has been mixed, falling in April and May and recovering slightly in June. Perez believes that efforts to mandate paid leave, raise the minimum wage, and improve infrastructure are longer-term actions that could boost that number. “The public policy intervention that we could do that would do the most to hasten the pace of labor-force participation increases is to pass paid leave,” said Perez. “You look at other countries and what they do in investing in paid leave, and their labor-force participation rates are higher because they understand the importance of paid leave as part of their economic competitiveness.”

Perez’s ideas for boosting participation are in line with what the International Monetary Fund recommended in its remarks on the US economy late last month:

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