The U.S. economy added 261,000 jobs last month, and the unemployment rate dropped slightly to 4.1 percent, according to the Labor Department’s October jobs report.
What does this actually mean for the market — and workers? We asked four experts to give us their takeaways on the latest numbers.
The job market is rebounding from storms in September
The uptick in jobs in October is welcome news after hurricane-related weakness in September. Combining the two months gets us an average of 139,500 jobs a month, which is above what we need to absorb new and returning members of the labor market.
… but the unemployment rate fell for the wrong reasons
While the unemployment rate fell slightly to 4.1 percent, it happened for the wrong reasons, as workers left the labor force, not because they found jobs.
And the black unemployment rate, which is almost always double white unemployment, ticked up noticeably. Working people and their families throughout the economy—black and Hispanic as well as white, young as well as prime-age, and high-school-educated as well as college-educated—still have much to gain from a genuine full employment economy. This means the Federal Reserve should keep interest rates low until the benefits of a growing economy reach all corners of the labor market.
— Elise Gould, senior economist at the Economic Policy Institute
More signs of sustained job growth …
We are experiencing an extraordinarily long period of job growth. Monthly job growth has averaged 196,000 since October 2010. This month’s growth of 261,000 jobs is above that average, but partially reflects volatility from the previous month, in which only 18,000 jobs were added. Taken together, our current trajectory is job growth of 162,000 a month. Not bad for an economy in its eighth year of a recovery.
The long period of job growth has helped lower unemployment for everyone. But the true beneficiaries of the long stretch of job growth are those with less education, as their unemployment rates have fallen later in the recovery. This month, the unemployment rate among those with less than a high school degree fell from 6.5 percent to 5.7 percent. A year ago, 7.4 percent were unemployed. The unemployment rate of those with only a high school degree has fallen from 5.5 percent a year ago to 4.3 percent in October, though that number is unchanged from the previous month.On the other hand, it’s an incredibly tight labor market for those with a college degree, only 2 percent of whom were unemployed in October. Those who are graduating from college next month should find a welcoming job market.
… but two ares of concern remain
There remain, however, two concerns in the labor market. The first is labor force participation, which dropped this month to 62.7 percent from 63.1 percent in September. A year ago, 62.8 percent of adults were participating in the labor market, so there has been no progress over the past year in raising the labor force participation rate. The second concern helps explain the first. Wage growth remains sluggish. Average hourly earnings fell one cent in October. While wages had risen more in September, the rise was completely offset by an increase in prices. With this month’s decrease in wages, real wages have declined for the past three months. No wonder the labor market isn’t succeeding in convincing more people to join.
— Betsey Stevenson, former member of the Council of Economic Advisers under President Barack Obama
The missing piece of the puzzle: wage growth
If there’s been one troubling aspect of the now years-long economic expansion, it has been the lack of more substantial wage growth. Some of this might reflect some statistical distortion because thousands of leisure and hospitality workers (part-time and lower paid) were sidelined by the storms. If we see more sustained improvement in wages as should be the case when the unemployment rate is knocking on the door of 4 percent, it would certainly be a welcomed missing piece of the economic puzzle.
— Mark Hamrick, senior economic analyst at Bankrate.com
Bottom line: More of the same
The good news: the October U-6 (the broadest measure of unemployment) fell to 7.9 percent – the best since December 2006 – largely due to sharply fewer individuals working part time for economic reasons. The bad news: average hourly earnings fell by $0.01. This can be somewhat explained by hurricane-related data, but wages are only up 2.4 percent over the past year. With average weekly hours flat, earnings growth is still an issue.
The bottom line: The reports for September and October are filled with hurricane-related turmoil in the data. But the average appears to be “more of the same.” Jobs continue to increase, but wages continue to lag.
— Douglas Holtz Eakin, president of the American Action Forum