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:
The labor force is fighting against a strong demographic headwind: the retirement of the baby boom generation. The participation rate — the share of adults who are either working or actively looking for work — is near multi-decade lows, largely because of the aging population. In recent months, however, the participation rate had begun to edge back up, as the strong job market drew idle workers off the sidelines.
Mr. Ryan said Friday’s report suggested that there simply aren’t many workers left to attract. “With jobless claims at 45-year lows, there’s really not a lot left on the sidelines,” Mr. Ryan said. “We’re at full employment.”
Glassdoor’s chief economist Andrew Chamberlain also highlights the wage problem in his take on Friday’s BLS report:
One weak point in today’s October jobs report was wages. After a very strong 2.9 percent year-over-year (YoY) wage growth in September, average hourly wages were up just 2.4 percent in October, despite a tightening labor market nationwide. In Glassdoor’s Local Pay Reports, we recorded 1.6 percent YoY growth in median base pay for full time workers in October — well below the normal pace of two to three percent per year.
One surprise in the October jobs report was a large drop in the nation’s labor force participation rate, from 63.1 percent in September to 62.7 percent in October — a huge drop for a single month. Economists have long predicted that labor force participation will continue to fall in the coming decades due to aging of the population, but this one-month drop shows that BLS surveys continue to be affected by short-term, storm-related disruption in the southeast.