2014: Best Year for Job Creation Since 1999
Holy Smokes: The government’s November jobs report was waaaaay better than analysts’ expectations. The economy added 321,000 jobs, the biggest gain since January 2012, and the unemployment rate remained at a six-year low of 5.8 percent. (The consensus estimate was for 230,000, with a range of about 150,000 to 275,000.) Additionally, revisions to the previous two moths amounted to 44,000 more jobs than originally reported.
This year, there have been ten consecutive months where employment has been over 200,000, the longest such period of gains since a 19-month streak from 1993-1995. Additionally, November was the 50th consecutive month of job gains – a record. Most importantly, with this report, 2014 has become the best year for job creation since 1999! (Cue the Prince music, please.)
OK, maybe not so fast. Just talk to anyone who is working or looking for a job and you may hear a different song -- perhaps Dolly Parton’s “9 to 5”. The biggest complaint is that wage growth is stagnant. In November, average hourly wages increased by 0.4 percent, nudging up the 12-month increase to 2.1 percent.
Annual wage growth has remained between 1.9 to 2.2 percent since 2012. In a normal expansion, increases are closer to 3 percent. According to the Financial Times, this is not a US-centric problem. “Wages have flatlined in the developed world as workers fait to benefit from an uneven global economic recovery.”
The wage issue is not surprising, because it is a longer-term issue. Globalization and technological innovation started to put pressure on wages in the 1990’s; then the Great Recession and the slow growth recovery accelerated the trend; and finally, in past recessions, companies cut wages and then subsequently raised them amid upturns. But in the past three recessions, Corporate America minimized wage cuts and instead let workers go to keep remaining workers happy. Because companies kept wages intact, the Federal Reserve Bank of San Francisco says that we should probably expect slower overall wage growth in this expansion.
Other parts of the labor market that are improving, but still remain problematic include the high number of Americans (6.9 million) who are working part-time because they couldn’t find full-time work; the 2.8 million people who have been unemployed for more than six months; and labor force participation rate (the percentage of those over the age of 16 who are either working or looking for work) remains near levels last seen in the late 1970s; and the broad unemployment rate, which includes involuntary part-time workers and people marginally attached to the labor force, is at a still high 11.4 percent.
While the November jobs report may not be cause for widespread euphoria, it is certainly a welcome piece of data…you’ll have to decide which song to invoke to mark the occasion.
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