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U.S. Added 227,000 Jobs in January U.S. Starts Year With Job Surge, but Pay Gains Are Weak
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Employers added a healthy 227,000 workers to their payrolls in January, the government reported on Friday. Employers added a healthy 227,000 workers to their payrolls in January, the government reported on Friday. But despite a surge of local minimum-wage increases, average hourly earnings grew by only 0.1 percent.
The official jobless rate rose slightly, to 4.8 percent, as more people returned to the work force. But despite a surge of local minimum-wage increases, average hourly earnings grew by only 0.1 percent. The official jobless rate rose slightly, to 4.8 percent, as more people returned to the work force.
“The labor market is doing about what we think it should be doing,” said Douglas Holtz-Eakin, the president of the conservative advocacy group American Action Forum and a former director of the Congressional Budget Office. “We’re back close to full employment.” “The labor market started 2017 on the front foot,” said Carl R. Tannenbaum, chief economist at Northern Trust. “This is a good, good number.”
Mr. Holtz-Eakin and economists at the Federal Reserve maintain that the Labor Department’s recent estimates are signals that employment is near capacity, even though the Oval Office’s current occupant has dismissed them as “phony numbers.” The meager monthly growth in wages, however, brought the year-over-year trend back down to a disappointing 2.5 percent, after shooting up to 2.9 percent in December, he added.
Certainly, for Americans who have been cut out of the rewards delivered by the nearly eight-year-long recovery, upbeat assessments do not mirror their personal experiences. A mismatch of skills or location, the lack of support like child care and day care, and employer discrimination are some of the reasons that high school graduates, laid-off factory workers, members of minorities, aging baby boomers and others have failed to find or regain a comfortable footing in the labor force. Economists at the Federal Reserve and elsewhere have been debating whether the low official jobless rate is signaling that employment is near capacity. January’s report, with its disappointing wage growth and bump up in the jobless rate, is evidence that there is still slack in the labor market.
The share of the working-age adults who are in the labor force is still at historical lows. And a broader measure of unemployment, which includes the millions who are working part-time but would prefer full-time jobs and those so discouraged by rejections that they have given up searching, has remained roughly twice the headline unemployment figure, an unusually high level for an extended expansion. Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, said in a statement: “Today’s jobs report is good news. Our economy is gaining some ground — but we have a lot of work ahead of us to get our economy running at full speed.”
But for Americans who have been cut out of the rewards delivered by the nearly eight-year recovery, upbeat assessments do not mirror their personal experiences. A mismatch of skills or location, the lack of support like child care and day care and employer discrimination are some of the reasons that high school graduates, laid-off factory workers, members of minorities, aging baby boomers and others have failed to find or regain a comfortable footing in the labor force.
The share of the working-age adults who are in the labor force is still at historical lows, but bumped up to 67.9 percent, a sign that at least some sidelined workers are being lured back. A broader measure of unemployment, which includes the millions who are working part time but would prefer full-time jobs and those so discouraged by rejections that they’ve given up searching, also rose, to 9.4 percent from December’s 9.2 percent.
Economists at Moody’s Analytics noted in a report this week that at least five measures, aside from the official unemployment rate, indicated that the economy has not yet reached full employment, including the share of those not in the labor force who want a job, the magnitude of the pool of long-term unemployed and the degree of wage growth.Economists at Moody’s Analytics noted in a report this week that at least five measures, aside from the official unemployment rate, indicated that the economy has not yet reached full employment, including the share of those not in the labor force who want a job, the magnitude of the pool of long-term unemployed and the degree of wage growth.
Revised estimates from December and November cut 39,000 jobs from the total payroll increases.
The picture for manufacturing was mixed. January showed a gain of 5,000 positions, which as Mr. Tannenbaum said, is “always a plus” given the impact of technology. But those additions were countered by lower revision from December’s gains. (The Labor Department will issue one more revised estimate for December, and two more for January. )
However strong (or not strong) last month’s totals are judged to be, they are a legacy of the Obama administration, based on surveys before President Trump took office on Jan. 20. While some employers may have made staffing decisions in anticipation of a Republican administration, this report does not reflect any specific policy changes. (The way the government estimates the jobless rate does not change from one administration to the next.)However strong (or not strong) last month’s totals are judged to be, they are a legacy of the Obama administration, based on surveys before President Trump took office on Jan. 20. While some employers may have made staffing decisions in anticipation of a Republican administration, this report does not reflect any specific policy changes. (The way the government estimates the jobless rate does not change from one administration to the next.)
Still, given the timing, the January job figures will end up serving as one benchmark against which a new president’s stewardship of the economy is judged.Still, given the timing, the January job figures will end up serving as one benchmark against which a new president’s stewardship of the economy is judged.
During the campaign, when the official unemployment rate never rose above 5 percent, Mr. Trump called the measure “one of the biggest hoaxes in American modern politics” and suggested that the true rate could be several times as high. Steven Mnuchin, his choice for Treasury secretary, said “the unemployment rate is not real” at his confirmation hearing last month, while Andrew Puzder, who was nominated to take over the Labor Department, has belittled the figure’s usefulness. (A survey last fall found that nearly half of Mr. Trump’s supporters “completely distrust the economic data reported by the federal government.”)During the campaign, when the official unemployment rate never rose above 5 percent, Mr. Trump called the measure “one of the biggest hoaxes in American modern politics” and suggested that the true rate could be several times as high. Steven Mnuchin, his choice for Treasury secretary, said “the unemployment rate is not real” at his confirmation hearing last month, while Andrew Puzder, who was nominated to take over the Labor Department, has belittled the figure’s usefulness. (A survey last fall found that nearly half of Mr. Trump’s supporters “completely distrust the economic data reported by the federal government.”)
Regardless of government estimates, however, employers across sectors and across the nation have increasingly complained about the difficulty of finding workers, a competition that kept the increase in the average hourly wage ahead of a 1.6 percent price inflation rate.Regardless of government estimates, however, employers across sectors and across the nation have increasingly complained about the difficulty of finding workers, a competition that kept the increase in the average hourly wage ahead of a 1.6 percent price inflation rate.
“We’re still continuing to see wage pressure as the candidate market continues to shrink,” said Amy Glaser, senior vice president of Adecco Staffing USA, which has 300 branch offices. In addition to the omnipresent hunger for engineers, Ms. Glaser said there is a demand for those with middle-level trade skills like welding that fell into disuse during the recession, as well as entry-level warehouse and light assembly workers.“We’re still continuing to see wage pressure as the candidate market continues to shrink,” said Amy Glaser, senior vice president of Adecco Staffing USA, which has 300 branch offices. In addition to the omnipresent hunger for engineers, Ms. Glaser said there is a demand for those with middle-level trade skills like welding that fell into disuse during the recession, as well as entry-level warehouse and light assembly workers.
“Employers are getting very creative,” said Ms. Glaser, whose office is in Lexington, Ky. “We’re seeing sign-on bonuses. They have added sabbaticals to their packages, increases to stock options, free child care on site and free meals. Anything to get a competitive edge.”“Employers are getting very creative,” said Ms. Glaser, whose office is in Lexington, Ky. “We’re seeing sign-on bonuses. They have added sabbaticals to their packages, increases to stock options, free child care on site and free meals. Anything to get a competitive edge.”
“I’m definitely seeing a trend of employers targeting certain pools of workers like the disabled, retirees that may be looking to return to the work force, and stay-at-home moms,” she added.“I’m definitely seeing a trend of employers targeting certain pools of workers like the disabled, retirees that may be looking to return to the work force, and stay-at-home moms,” she added.
Companies that employ trade workers like welders and mechanics are increasingly joining with community colleges, technical schools and even high schools to develop a new generation of skilled employees. Other businesses are experimenting more with apprenticeships and internships.Companies that employ trade workers like welders and mechanics are increasingly joining with community colleges, technical schools and even high schools to develop a new generation of skilled employees. Other businesses are experimenting more with apprenticeships and internships.
David Nilssen, chief executive of Guidant Financial, a small-business financier based in Seattle, added 30 additional employees last year to its 80-person work force. The trouble he has had recruiting and retaining staff members was echoed in a Guidant survey of about 2,000 clients, who listed the worker shortage as their main challenge.David Nilssen, chief executive of Guidant Financial, a small-business financier based in Seattle, added 30 additional employees last year to its 80-person work force. The trouble he has had recruiting and retaining staff members was echoed in a Guidant survey of about 2,000 clients, who listed the worker shortage as their main challenge.
“A lot of small and mid-sized businesses are facing what I call a war for talent, especially tech talent,” Mr. Nilssen said, explaining that it was harder for them to compete with larger salaries and perks offered by bigger firms.“A lot of small and mid-sized businesses are facing what I call a war for talent, especially tech talent,” Mr. Nilssen said, explaining that it was harder for them to compete with larger salaries and perks offered by bigger firms.
At the lower end of the pay scale, local minimum-wage increases — ranging from as small as 5 cents an hour in Florida and Alaska to $1.95 an hour in Arizona — affected approximately 4.3 million workers across 19 states in January. The widest impact was felt in Arizona, California and Washington, where more than 1 in 10 workers got a raise.At the lower end of the pay scale, local minimum-wage increases — ranging from as small as 5 cents an hour in Florida and Alaska to $1.95 an hour in Arizona — affected approximately 4.3 million workers across 19 states in January. The widest impact was felt in Arizona, California and Washington, where more than 1 in 10 workers got a raise.
Employees in Oregon, the District of Columbia and Maryland are scheduled to get an increase later this year.Employees in Oregon, the District of Columbia and Maryland are scheduled to get an increase later this year.
That is a “built-in increase” that operates outside any market pressures, said Carl R. Tannenbaum, chief economist at Northern Trust, in Chicago.
Analysts, backed by research from the Federal Reserve, have been recalibrating their measures of what constitutes a strong number of hires, given how far the headline unemployment rate has fallen. Economists estimate that it takes 50,000 to 110,000 new jobs to absorb growth in the population and keep the jobless rate steady. That has prompted several economists to label the creation of 150,000 jobs or more a solid showing; that figure is below the average monthly gains of 180,000 in 2016 and 220,000 in 2015.Analysts, backed by research from the Federal Reserve, have been recalibrating their measures of what constitutes a strong number of hires, given how far the headline unemployment rate has fallen. Economists estimate that it takes 50,000 to 110,000 new jobs to absorb growth in the population and keep the jobless rate steady. That has prompted several economists to label the creation of 150,000 jobs or more a solid showing; that figure is below the average monthly gains of 180,000 in 2016 and 220,000 in 2015.
Kevin Cummins, senior United States economist at NatWest Markets, said this month’s report is “not going to a game changer for the Fed,” as far as raising interest rates is concerned. “But the labor market seems to be pretty healthy,” he said. “The tame wage pressure we’ve seen doesn’t suggest inflation.”Kevin Cummins, senior United States economist at NatWest Markets, said this month’s report is “not going to a game changer for the Fed,” as far as raising interest rates is concerned. “But the labor market seems to be pretty healthy,” he said. “The tame wage pressure we’ve seen doesn’t suggest inflation.”
Ken Esch at the accounting and consulting firm PricewaterhouseCoopers sounded a slightly more cautious note. According to its fourth-quarter survey of 400 business leaders, a tiny but growing number said they planned layoffs. “A lot of companies are starting to think about cost cutting for the year ahead,” Mr. Esch said, which “could result in some lower hiring levels.”Ken Esch at the accounting and consulting firm PricewaterhouseCoopers sounded a slightly more cautious note. According to its fourth-quarter survey of 400 business leaders, a tiny but growing number said they planned layoffs. “A lot of companies are starting to think about cost cutting for the year ahead,” Mr. Esch said, which “could result in some lower hiring levels.”
Mr. Trump, who ordered an across-the-board hiring freeze for the federal government last week, has pledged on the White House website to create 25 million new jobs — a staggering number that would eclipse the total number of private-sector jobs created during Ronald Reagan’s eight-year tenure, George Bush’s four-year term and George W. Bush’s eight years combined.Mr. Trump, who ordered an across-the-board hiring freeze for the federal government last week, has pledged on the White House website to create 25 million new jobs — a staggering number that would eclipse the total number of private-sector jobs created during Ronald Reagan’s eight-year tenure, George Bush’s four-year term and George W. Bush’s eight years combined.