Jobs Numbers Demonstrate Strengthening Economy
SOURCE: AP/Mike Groll
This article was originally published in MarketWatch.
Despite serious international economic headwinds and the still-lingering consequences of the Great Recession on key sectors or our economy, 171,000 new jobs were created in October, on top of upward revisions of jobs growth in August and September of 84,000 new jobs.
The numbers released today by the U.S. Bureau of Labor Statistics show the resilience of the U.S. economy, providing further proof that investing in our middle class is helping our economy recover steadily and putting the job market on a firm track to full recovery.
Thirty-two straight months of private-sector job growth is a major accomplishment.
Today’s announcement also shows that unemployment ticked up to 7.9 percent in October, but the data underlying this rate show that a stronger labor market appears to be generating greater optimism about finding a job. The bureau’s survey of households shows that over the past two months, nearly a million (996,000) people entered or re-entered the labor force, while at the same time, 1.3 million people reported gaining employment.
In October the share of the U.S. population reporting that they had a job ticked up slightly, from 58.7 percent to 58.8 percent, higher than any month since August 2009.
There was also a sharp uptick in hiring in October among retailers in sectors that are associated with people feeling more secure about their family finances, including big-ticket items such as home furnishings and automobiles. Car and car parts dealers added 7,300 jobs, more than in any month since the “cash for clunkers” program in late 2010. Furniture and home furnishing stores added 3,500 new jobs, more than in any single month since before the beginning of the Great Recession.
Overall, in October, retail trade added 36,400 jobs, far more than in the typical month.
Manufacturers added 13,000 jobs in October following job losses in August and September. Since January 2010 manufacturers have added jobs in all but four months. But all is not rosy in this sector of the economy.
What explains the overall hiring uptick?
Hiring is probably being supported by the fact that wage growth is failing to keep pace with inflation. Wages grew by a quarterly annualized rate of 1.4 percent. This means that take-home pay is falling once we account for inflation. Prices, as measured by the consumer price index, increased by 2 percent over the past 12 months, more than wages. Since the recession ended in June 2009, wages have fallen in inflation-adjusted terms by 1.1 percent.
Greater hiring is also reflected in the data showing that employers are not asking more in terms of hours of the employees they have on staff. Average hours worked per week and overtime hours were flat in October among all workers. Yet among production workers only, both the average workweek and overtime hours fell by 0.1 hour per week.
Even though the labor market is moving in the right direction, the household survey shows that for those out of work, it does not appear to be any easier to find a job. The share of the unemployed who have been job searching for at least six months remains exceptionally high, at 40.6 percent, and the typical unemployed worker is taking 19.6 weeks to find a new job.
Among those who are unemployed—that is without a job, but actively seeking employment—the reasons that they are out of work are beginning to look like there are more opportunities for job switching.
The share of those who are unemployed because they lost their last job involuntarily fell to 54 percent in October, from 54.3 percent in September, lower than any month since August 2008, while the share who are unemployed because they chose to leave their last job moved up from 7.9 percent to 8.3 percent—only the second time that share has been above 8 percent since the end of 2008.
This is another indicator of optimism because it indicates that people are increasingly feeling like they can take the risk of leaving a job that isn’t a good fit in search of a better opportunity.
As our nation recovers from Hurricane Sandy’s devastation, another storm threatens to derail the economy: the impending fiscal cliff.
Unless Congress takes action by the end of the year, the federal budget will be cut drastically. While the labor market is moving in the right direction, sharp spending cuts come January would potentially create the conditions for a double-dip recession, a disaster working and unemployed Americans alike cannot afford.
This week’s weather disaster underscores how we could continue to boost our economy and hasten the pace of job creation by making investments necessary to upgrade our aging infrastructure, ensure the kinds of investment in science that can help predict these kinds of devastating storms, and address climate change. These steps would not only lay the foundation for long-term growth but would also quicken job creation in the near term.
Heather Boushey is a Senior Economist at the Center for American Progress.
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