By Matthew E. Milliken
Jan. 10, 2015
On Friday morning, the Bureau of Labor Statistics released employment numbers for December 2014. Many commentators highlighted the positives: Unemployment dropped from 5.8 percent in November to 5.6 percent last month, and 252,000 new jobs were added, mostly in the private sector.
I’m no economist, but I thought that the data were mixed. Here’s my look at the good, the bad and the ugly from the latest BLS report:
• The good. Job creation fell slightly from November but was still strong. As Mother Jones blogger Kevin Drum is fond of reminding readers, about 90,000 new jobs are needed each month to keep up with population growth; even so, the remaining number of jobs, 162,000, is not too shabby.
In fact, it’s hard to overstate the positive job-growth numbers that the government has been reporting, not just for December but for all of 2014. Per columnist Dan Diamond, the U.S. added 2.95 million jobs last year, the most since 1999. Not only has the nation now created more jobs than were lost in the Great Recession (December 2007 through June 2009), three of the top four years for job creation since 1999 have come during the Obama administration, Diamond noted Friday in other tweets.
(Incidentally, Diamond also observed that the growth in health-care jobs in 2014 — 311,000 new jobs — made for that sector’s best year since 2008. Maybe this will be the year when Obamacare’s job-killing provisions start to have an impact?)
Liberal journalist Eric Boehlert, of Media Matters, later tweeted that the number of new U.S. jobs in 2014 was about twice the amount created during President George W. Bush’s entire administration. The nation lost 671,000 jobs during Bush’s second term; by comparison, halfway through Obama’s second term, nearly 5.1 million jobs have been created, per Diamond.
• The bad. If you noticed that the top-line unemployment rate was missing from the previous section, good for you.
Yes, the jobless rate is now just 5.6 percent. Unfortunately, despite December’s employment growth, the key reason for that decline is more because people left the labor force — that is, they stopped looking for jobs — than because people found new work.
Also, the unemployment rate for blacks is still in the double digits — 10.4 percent. The next-highest jobless rate for another major racial or ethnic group is for Hispanics and Latinos, at 6.5 percent.
Another datum should be categorized as “the bad”: The nation’s civilian labor force participation rate, which is the ratio of Americans 16 and older who are working or seeking work, declined slightly to 62.7 percent. That’s down from an all-time high of 67.3 percent in early 2000 and the lowest level since 1978.
• The ugly. Then there’s wage levels, which rose by a modest 1.7 percent (or 40 cents per hour) in 2014, to an average hourly pay rate of $24.57. Yes, that’s up. No, it’s not up by much. And yes, it’s down from the modest gains the nation saw in November 2014.
As someone concerned with our society’s systemic wealth gap, I’d love to see stronger wage growth. However, there’s a reason why I didn’t categorize this data as “the bad.” As Justin Wolfers, a professor of economics and public policy at the University of Michigan, wrote in The New York Times today:
Friday morning’s report tells us what is happening with nominal or money wages, the total number of dollars in your paycheck, with no adjustment for inflation.
Even if nominal wages were rising quickly, we have no idea how much of that will translate into higher real wages, because we don’t know the extent to which businesses will pass through higher labor costs into higher inflation. Likewise, it remains possible that even weak growth in nominal wages will actually yield moderate growth in real wages. Indeed, the recent declines in gas prices are doing exactly that.
Wolfers believes that the modest growth in nominal wages is a sign that the economy is, in his words, “ready to put more people back to work.”
So there we have it. The domestic economy continues its recovery, even if things aren’t exactly ideal. It’ll be interesting to see what 2015 brings, especially with the world economy floundering.