Despite job growth, wage growth isn’t accelerating

The US Bureau of Labor Statistics reported that the economy added 266,000 jobs in November. While this figure is inflated by the return of roughly 50,000 striking GM autoworkers, upward revisions to the prior two months’ data brought the three-month average to a solid 205,000.

What you just heard were words selected from an article penned by Dean Baker who is a macroeconomist and senior economist at the Center for Economic and Policy Research in Washington which he co-founded. He previously worked as an assistant professor at Bucknell University.

The US Bureau of Labor Statistics reported that the economy added 266,000 jobs in November. While this figure is inflated by the return of roughly 50,000 striking GM autoworkers, upward revisions to the prior two months’ data brought the three-month average to a solid 205,000. The job growth existed across industries. Manufacturing added 54,000 jobs, somewhat more than the number of returning strikers. It appears that the sector may again be on a modest path. Job growth for the two months together falls slightly below the 34,500 average for the last year. Restaurants added 25,300 jobs, roughly its average for the last year. The high-paying professional and technical services sector added 30,600 jobs, after three months of weak growth.  

Construction employment remains weak, with the sector adding just 1,000 jobs in November. Job growth has averaged just 5,600 a month since June. Support activities for mining, which has been losing jobs since February, lost another 5,700 jobs in November. Employment in that sector is now down 6.6 percent over the last year. Retail added 2,000 jobs for the month, but employment is still down 31,400 (0.2 percent) over the last year.

In spite of the job growth, there continues to be no evidence of accelerating wage growth. The average hourly wage increased 3.1 percent over the last year. The annual rate of growth over three months (September, October, and November), compared to the prior three months (June, July, August), was just 3 percent.

The average duration of unemployment spells fell in November, as did the share of the long-term unemployed. There was a modest increase of 0.1 weeks in the median duration. Perhaps the most disturbing item was the dip in the share of unemployment due to voluntary quits from 14.5 percent to 13.3 percent. Another discouraging item in the household data is the decline in the share of the workforce that chooses to work part-time. This fell by 15,000 in November. For the year average to date, this figure is up by less than 0.5 percent, meaning that it is dropping as a share of total employment. The share of voluntary part-time employment had increased sharply after the Affordable Care Act took effect, the recent decline is likely an indication of the increasing difficulty of getting health care coverage outside of employment.

The pace of job growth clearly has slowed some from its 2018 rate and the major downside is that workers seem to remain insecure about their employment prospects.

AJ/SS