There was nothing surprising about Friday morning’s report on the state of the American job market. And that’s (mostly) good news.
The labor market — and the economy more generally — has gained momentum as 2014 has progressed, judging from the readings of the job market. The latest numbers do not point to any acceleration of the trend, but neither do they point to deceleration. Rather, they reinforce what we thought we knew, and can give a bit of solace to anyone who interpreted a burst of financial market volatility last month as a sign that the economy was heading for the rocks.
There were 214,000 net jobs added to employers’ payrolls in October, a bit below the previous couple of months (and analyst expectations), but comfortably within the range of what you might expect given the results of the last few months. Over the last three months, job growth has averaged 224,000. Six-month average? 235,000. Twelve months? 220,000. That’s about as steady as these things get.
And the trends in the unemployment rate are similar. Joblessness has fallen steadily since October 2009, when it peaked at 10 percent, at a rate just a bit slower than 1 percentage point a year. That trend continued apace, with the rate ticking down to 5.8 percent from 5.9 percent. Perhaps even more welcome is that a broader measure of unemployment — which also captures people who want full-time work but are working part-time and those who have given up looking for a job out of frustration — is coming down even faster, at 11.5 percent in October from 11.8 percent. Just a year ago it was 13.7 percent.
Unemployment Continues Falling
The unemployment rate fell again in October, as did a broader measure of underemployment. Both are at their lowest levels since 2008.
As always, the big question on these unemployment numbers is whether they are changing for good reasons or bad ones. Are more people finding jobs, or are fewer people looking? Here, too, the October readings are generally favorable.
Workers Who Left the Labor Force Have Not Returned
During the 2008 recession and its aftermath, millions of Americans ceased looking for work and left the labor force. They haven’t returned in large numbers despite job growth.
In the government’s survey of households, more people (683,000, to be precise) reported having a job. Fewer people (267,000) reported being unemployed. And fewer people (206,000) reported not being in the labor force at all (that is, neither having a job nor wanting one).
All that was enough to push the ratio of the employed population up 0.2 percentage points to 59.2 percent, its highest level since July 2009. But it’s worth putting that number in a slightly longer context. While it’s welcome news that unemployment is falling for the right reasons, the gains so far are nowhere near enough to make up for the steep declines in the size of the labor force that happened from 2008 to 2010.
The other important caveat in this report is that there is barely a hint of any meaningful rise in private-sector wages. The average hourly private-sector wage rose a mere 0.1 percent in October. The average length of the workweek ticked up — but that merely reversed a downward revision of September data.
Few Signs of Accelerating Wages
Over the past year, average hourly private-sector wages have risen 2 percent, about the same rate as in the last two years.
Inflation is running at a bit under 2 percent (October data are not in yet), so that does most likely signal a small increase in the purchasing power of Americans. But despite a flurry of worry earlier in the year that wages were really starting to rise in a way that might lead to higher inflation, there’s no evidence of that kind of acceleration in the data.
Add it up, and this economy is what we thought it was: consistent, predictable, steady, with stronger growth in the number of people working than in what those workers are being paid.