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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:
In another sign of the US labor market’s robustness, the number of Americans filing new unemployment claims fell last week to its lowest level in over 44 years, Reuters reported on Thursday:
Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said. … Claims are declining as the impact of Hurricanes Harvey and Irma washes out of the data. The hurricanes, which lashed Texas, Florida and the Virgin Islands, boosted claims to an almost three-year high of 298,000 at the start of September.
A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department was estimating claims for the islands.
The week’s massive decrease in claims was likely inflated by the Columbus Day holiday, but other data in the Labor Department’s report also indicate a very healthy labor market: The number of people still receiving benefits after an initial week of aid fell 16,000 to 1.89 million in the week ended October 7, which was the lowest level since December 1973, and the four-week moving average of continuing claims fell 22,750 to 1.91 million, the lowest since January 1974.
Reuters also highlighted a report from the Federal Reserve Bank of Philadelphia indicating strong employment in the manufacturing sector in the mid-Atlantic region this month, with the bank’s measure of factory employment rising 24 points to a record high of 30.6. That report’s average workweek index also increased, while no firms reported decreases in unemployment in October.
The annual Freelancing in America survey, released this week by Upwork and the Freelancers Union, paints a picture of a freelance workforce that is growing much faster than the US workforce in general. The report estimates the total number of US freelancers today at 57.3 million, or 36 percent of the total American workforce. That number has grown more than three times faster than the overall workforce in the past three years, and if this rate of change holds, freelancers are projected to compose a majority of the US workforce by 2027. Millennials are leading the trend in this direction, with 47 percent of millennial workers saying they freelanced.
The survey of over 6,000 US adults also finds that freelancers are doing better than their traditionally employed peers at preparing themselves for their professional futures: 55 percent of freelancers said they had engaged in some kind of re-skilling activity in the past six months, compared to 30 percent of regular workers. In general, 65 percent of freelancers said they were updating their skills as work evolved, while just 45 percent of others said so.
Freelancers are also feeling the impact of technological change more acutely, with 49 percent saying their work had already been affected by AI and robotics, against just 18 percent of full-time employees. At the same time, technology is also bringing them more work, with 71 percent saying the amount of work they had found online had increased in the past year.
Another interesting finding is that while many people lump freelancers in with the gig economy, freelancers don’t: Only 10 percent of freelancers in the survey said they considered themselves a part of that economy. Indeed, we’ve seen from other research that the gig economy, properly speaking—meaning workers who make a living through platforms like Uber—is just one component of the new trend toward contingent and temporary employment in the US labor market. Fast Company’s Ruth Reader considers why freelancers might be rejecting the “gig economy” label:
A Houston-area neighborhood after Hurricane Harvey (Eric V Overton/Shutterstock)
The US economy lost 33,000 jobs in September due to the destructive impact of Hurricanes Harvey and Irma on Texas and Florida, falling far short of economists’ predictions of 90,000 new jobs, according to the latest figures from the Bureau of Labor Statistics, released Friday. The unemployment rate, however, fell from 4.4 to 4.2 percent, the lowest rate since February 2001, suggesting that the labor market is still fundamentally strong. Marketplace delves into the details of the report:
Last month’s drop was driven by huge losses in restaurants and bars, which shed 105,000 jobs, a sign of the damage to Florida’s tourism industry. Roughly 1.5 million people were unable to work last month because of the weather, the government said, the most in 20 years. Hourly workers who couldn’t work and missed a paycheck would have been counted as not working, thereby lowering September’s job total. That’s true even if those employees returned to work after the storm passed or will return.
The unemployment rate fell because it is calculated with a separate survey of households. That survey counted people as employed even if they were temporarily off work because of the storms. In fact, the proportion of adults who have jobs rose to 60.4 percent, the highest since January 2009. … “The weakness in payrolls was likely because of temporary hurricane effects. Other parts of the report were much stronger than expected,” wrote Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Average hourly wages rose 2.9 percent, but the Labor Department cautioned against reading too much into that figure, which was inflated by the fact that most of the jobs temporarily wiped out by the hurricanes were lower-paid. Overall, the Wall Street Journal reports, September’s jobs numbers leave the Federal Reserve on track to raise interest rates again later this year, undeterred by the disaster-induced dip in growth.
New data released by the US Census Bureau on Tuesday shows that real median household income increased by 3.2 percent between 2015 and 2016, from $57,230 to $59,039, while the official poverty rate decreased by 0.8 percentage points to 12.7 percent. In absolute terms, that means 2.5 million fewer Americans were living in poverty last year than the year before, but 40.6 million still were. The 2016 poverty rate, the bureau notes, is only slightly higher than the 12.5 percent rate recorded in 2007, the year before the Great Recession began.
US workers’ incomes are also close to fully recovering from the recession, Aimee Picchi adds at CBS Moneywatch, with last year’s figures “just 1.6 percent below what households earned before the recession started in late 2007, according to the Economic Policy Institute, a left-leaning think tank”:
“We’re back to where we were before the recession,” said Sheldon Danziger, president of the Russell Sage Foundation, which focuses on poverty research. “You have an economy that has flat-lined for people with a high school degree or less since the 70s and flat-lined for the middle class during the last 20 years.” …
Dennis Yip/Flickr/Public Domain
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.
After six straight years of improving numbers in its annual job satisfaction survey, the Conference Board announced last week that more than 50 percent of US employees are happy with their jobs for the first time since 2005:
The increase in job satisfaction is largely due to the improvement in the labor market in recent years. “Workers are benefiting from historically low layoff rates, which adds to a greater sense of job security,” said Michelle Kan, Associate Director, Knowledge Organization, and a co-author of the report with Rebecca Ray, Executive Vice President, Knowledge Organization and Human Capital Lead, Gad Levanon, Chief Economist, North America, and Allen Li, Associate Economist at The Conference Board. “Employees have more opportunities at other companies and more confidence in pursuing those opportunities. And, as it becomes harder to find qualified workers and retain existing ones, employers are gradually accelerating wage growth and improving other job features.”
“The US labor market will likely remain tight for most of the next fifteen years,” said Levanon. “With the massive retirement of baby boomers continuing through 2030, we expect the US labor market will be quite tight during that period, contributing to higher job satisfaction levels in the coming years.”
Despite the expectation of a continuously tight labor market, Levanon notes that US job satisfaction is unlikely to rebound to the levels seen 20 or 30 years ago, a prediction he attributes to other factors such as “the emphasis on maximizing shareholder value, declining unionization, outsourcing (both domestic and foreign) and market concentration.” While job satisfaction climbed from 49.6 percent last year to 50.8 percent this year, that’s a far cry from the 61.1 percent who said they were happy in their jobs in 1987, Washington Post columnist Jena McGregor points out.