Employers added 228,000 jobs in November, largely in the professional and business service and health care sectors, according to the latest report from the Labor Department.
The unemployment rate, which measures those looking for a job who have not yet found one, remained unchanged, at 4.1 percent.
What else did November’s report tell us about workers and the economy? We ask experts for their take as we approach the end of 2017.
After volatility from this fall’s hurricanes, November’s report shows some return to normalcy, said Mark Hamrick, Bankrate.com‘s senior economic analyst. Job growth this month and strong numbers over the past three have been “strong enough to keep up with population growth and absorb some of the workers who are still sidelined from the Great Recession,” added Elise Gould, senior economist at the Economic Policy Institute.
There’s a slight uptick in workers ages 25-54 — an important benchmark in the recovery from the recession, Gould says. This means the economy is moving in the right direction, but Gould cautioned “we still have a long way to go to before we reach recent historical benchmarks” for the prime-age employment-to-population ratio (EPOP).
Wages are growing …
Douglas Holtz-Eakin, president of the American Action Forum, says:
- Average hourly earnings rose by $0.05 – showing an annual growth rate of 2.3 percent (and up 2.5 percent year-over-year)
- Average weekly hours ticked up by 0.1 to 34.5 hours, and
- Bureau of Labor Statistics index of weekly payrolls, a good economy-wide summary of the labor income being generated rose by 0.7 percent – a big increase.
… but wage growth is still below where it should be. “The best indicator that there’s still some slack in the economy is year-over-year nominal wage growth,” Gould said. “At 2.5 percent and exhibiting no sign of acceleration, wage growth is still below where it should be.”
And overall, job growth is starting to slow. “We are experiencing an extraordinarily long period of job growth that began in October of 2010,” said Betsey Stevenson, former member of the Council of Economic Advisers under President Barack Obama. “We have one month left to go, but it looks like job growth slowed a bit in 2017.” Given the low unemployment rate, that’s not a surprise, Stevenson said.
Does this mean the Fed will raise interest rates?
Gould says the Federal Reserve should keep in mind subpar wage growth and “resist pressure to raise interest rates.” But Aberdeen Standard Investments Investment Strategist Luke Bartholomew said the Fed is likely to still announce a hike next week, “in part because this is what they have led investors to expect.”
What are the strengths in our economy? “For decades now, most job growth has occurred in the service sector, and the past year was no exception. Technological change has made the goods-producing sector a smaller part of the U.S. economy, and that trend is likely to continue,” Stevenson said.
She said over the past year, of the 2.1 million jobs added:
- 1.6 million were private service providing jobs
- A quarter of all new jobs were professional and business services — consulting, accounting, architecture, engineering and other administrative services
- Education and health services added about a half million jobs
Who lost? Retail -“a sign of structural changes in the American retail sector,” Stevenson said.
But we did see some demand for U.S.-made goods, Hamrick said. The report showed 31,000 jobs added in manufacturing last month, and overall the industry has been up nearly 200,000 over the past 12 months. Construction also saw growth, likely in part from reconstruction and recovery from flooding and hurricane damage.
The true winners in this long stretch of job growth: those with less education, Stevenson said, noting that the unemployment rate among those with less than a high school degree fell from 7.9 to 5.2 percent. The unemployment rate of those with only a high school degree has fallen from 4.9 a year ago to 4.3 percent, she said.
The biggest question for December: How do you spark better wage growth? “Trump’s tax cuts will play into the debate, but they won’t solve the riddle,” Bartholomew said.