The latest jobs numbers from the US Department of Labor, released on Friday, show that the US economy continues to create jobs at a robust pace despite historically low levels of unemployment. According to the April report from the Bureau of Labor Statistics, 263,000 jobs were created last month, overshooting analysts’ predictions in the range of 185,000-190,000. The unemployment rate fell to 3.6 percent, a level not seen in the US since December 1969.
Wages also rose, albeit more modestly than economists would expect to see in such a tight labor market: Average hourly earnings were up 0.2 percent month-to-month for a 3.2 percent increase over the last 12 months. While this was nearly the best year-over-year growth figure since the end of the Great Recession in 2009, it doesn’t make up for years of stagnation, while inflation wiped out a significant portion of those gains, Vox highlighted in its coverage of the jobs report:
The latest pay data suggests that workers and labor unions will continue to strike to force businesses to boost wages. Slow income growth has been the weakest part of the US economy in its recovery from the Great Recession. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded. April’s 6-cent average hourly wage hike suggests more of the same, despite a surprising 10-cent jump in February.
Over the past year, the cost of food and housing has gone up, so paychecks have had to stretch further. But because of recent falling gas prices, the annual inflation rate has fallen to 1.9 percent, compared to a high of 2.4 percent in 2018 (based on the Consumer Price Index). So when you take inflation into account, workers’ real wages only grew about 1.3 percent within the past year.
There are also reasons to hesitate before celebrating the decline in the unemployment rate, the New York Times pointed out, noting that “the factors behind it aren’t as hopeful as the headline number itself”:
Monkey Business Images/Shutterstock
I’m what many people would call a gamer. I own and play a lot of video games, I see games as my primary source of entertainment, and I’ve even built my own high-end gaming computer. I’m also pretty well connected with the gaming communities studied in the recent controversial paper claiming that better video games may account for why young men are declining to pursue full-time employment. I don’t dispute the data backing up these economists’ argument, but I do take issue with their framing.
The premise of the paper (as it has been described in the popular press) is that young men are choosing video games over potential jobs because video games are as good at building the social networks and feelings of self-fulfillment as those jobs. However, my experience with this community suggests the opposite: Gamers who choose not to work do so not because because games are a great substitute for a career, but because the jobs they would qualify for don’t make them happy.
Among the gamers I know who best fit the profile of the demographic examined in the study, many are vocal about the dissatisfaction they feel with the roles available to them. This seems to be reflected in the data itself: The paper also finds that while more educated young men are also playing more video games, this has not led to a significant decline in their average work hours. Undereducated gamers, by comparison, tend to qualify only for jobs that are dull and menial, with low pay, poor mangers, no upward mobility, and high and risky barriers to better job opportunities (particularly, college education). Many don’t see gaming all day as a goal, but the best of several bad options—the exception being those few gamers who believe they can play competitively.
One of the most challenging and puzzling trends in the US labor market since the Great Recession has been the persistently high number of long-term unemployed Americans of working age. Even as the economy has improved and the labor market has tightened, labor force participation remains at a lull, and many of those who dropped out of the workforce in the past decade appear unwilling or unable to re-enter it. That’s particularly true of prime-age men without college degrees, who have lost ground in the job market as traditional blue-collar jobs have disappeared or become less lucrative—and will most likely continue to disappear in the coming decade as roles mostly held by women grow in availability and importance.
Employers and policymakers have begun to think harder about how to get these men re-engaged in the workforce, whether through earning college degrees or transitioning into traditionally female-dominated professions like health care. There is, however another possible explanation for the decline of work among young men: What if they’re not working as much because they don’t want to? What if they’d rather be playing video games? That’s the provocative conclusion of a new paper by economists Erik Hurst, Mark Aguiar, Mark Bils, and Kerwin Charles, released recently by the National Bureau of Economic Research. The New York Times‘ Quoctrung Bui goes over the paper’s findings in detail:
By 2015, American men 31 to 55 were working about 163 fewer hours a year than that same age group did in 2000. Men 21 to 30 were working 203 fewer hours a year. One puzzle is why the working hours for young men fell so much more than those of their older counterparts. The gap between the two groups grew by about 40 hours a year, or a full workweek on average. …
Hurst and his colleagues estimate that, since 2004, video games have been responsible for reducing the amount of work that young men do by 15 to 30 hours over the course of a year. Using the recession as a natural experiment, the authors studied how people who suddenly found themselves with extra time spent their leisure hours, then estimated how increases in video game time affected work.
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:
Unemployment in the US fell slightly to 4.4 percent in April as the economy added 211,000 jobs, the Bureau of Labor Statistics reported on Friday. Underemployment is also on the decline, with the number of involuntary part-time workers (employed part time for economic reasons) falling by 281,000 to 5.3 million last month, contributing to a total decrease of 698,000 last year. Wages continued to grow at a slow pace of 2.5 percent year-over-year, better than nothing but short of the growth the Federal Reserve wants to see, which would be closer to 3.5 percent.
Job growth in April exceeded analysts’ expectations, which had been in the 180,000-190,000 range. March’s job creation numbers were revised downward by 19,000, but February figures were revised upward by 13,000, adding up to only a modest downward adjustment. Still, challenges remain in the US labor market, one economist points out to the New York Times:
Payrolls in the leisure and hospitality industry led the way, followed by health care and financial and professional services. “They’re not buying cars, but they’re buying vacations,” said Diane Swonk, founder of DS Economics in Chicago. Though the official jobless rate dipped even lower, the labor participation rate fell slightly to 62.9 percent last month from 63 percent, a signal that workers who had been sidelined are not being drawn back into the labor market.
davelogan / istock.com
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:
The US economy added 156,000 jobs in December, continuing a trend of steady, albeit not robust, hiring, while the unemployment rate rose slightly from 4.6 percent in November—a nine-year low—to 4.7 percent, the Associated Press reports:
Hourly pay jumped 2.9 percent from a year earlier, the biggest increase in more than seven years. That is a positive sign that the low unemployment rate is forcing some businesses to offer higher wages to attract and keep workers. Sluggish growth in Americans’ paychecks has been a longstanding weak spot in the seven-year economic recovery. For all of 2016, job growth averaged 180,000 a month, down from 229,000 in 2015, but enough to lower unemployment over time.
Weak spots remain in the job market: A smaller share of Americans either have a job or are looking for one than before the recession. That is particularly true for men. … Though the unemployment rate is at a healthy level, the proportion of Americans in their prime working years who are either working or looking for work remains far below its pre-recession level.
The increase in wages is a notable bright spot in an otherwise unremarkable jobs report, the New York Times adds: