The U.S. economy added a net 161,000 jobs in October and the unemployment rate ticked back down to 4.9 percent, but, as has been the case for a number of months now, that wasn’t the most important news from the Bureau of Labor Statistics this morning.
The much more important news is that wages are growing steadily, but not spectacularly. After a strong month in September, when mean hourly wages rose 8 cents, they rose another 10 cents in October, while hours worked held steady or grew a bit.
Adding 161,000 jobs isn’t much to write home about and not news in this generally weak economic recovery (in fact, it’s part of a downshift from 2015, when we averaged more than 200,000 jobs a month). But seeing this with decent wage growth is. Critics of the Obama economy were absolutely right to continually point out that, even as job growth strengthened significantly in 2013 and 2014, wage growth still didn’t appear. Well, it’s now showing up — but at far from stunning levels.
The context is important: Yes, this is by far the strongest growth we’ve seen during this recovery. But you don’t have to go back very far — in fact, just before the recession itself — to see that this is not groundbreaking growth. It’s just what the economy does when it’s actually healthy.
— Joe Weisenthal (@TheStalwart) November 4, 2016
So if you’re thinking, “well, won’t we need more than six months of this?” you’re exactly right.
The good news is that this morning’s report also seems to confirm that this growth is not just boosting people’s earnings, but also finally pulling inactive people back toward the labor market. While the number of people stuck working part-time when they want full-time work remains stubbornly high and actually jumped this month, people who are marginally attached to the labor force (they gave up looking for jobs, for instance) seem to be finding jobs more frequently. Simply speaking, if the economy is creating more jobs than we’re creating people (it is), and the unemployment rate is holding steady, that means new people are looking for work.
The labor force participation rate is still near historically low levels, but that masks noticeable improvement in the participation rate among prime-age workers, which has risen noticeably since last year. That’s good news, but it remains to do what the Obama administration has been trying to do and spin this as spectacular: