http://www.nytimes.com/2016/11/05/upshot/these-jobs-numbers-show-an-economy-that-is-basically-healthy.html
JOBS REPORT These Jobs Numbers Show an Economy That Is Basically Healthy Neil Irwin @Neil_Irwin NOV. 4, 2016 Making thread from recycled plastic bottles in Yadkinville, N.C. Automation has led to a decline in American manufacturing jobs, even as output has grown. CreditChuck Burton/Associated Press The United States economy is basically healthy.That is the simplest, most important thing to take away from new jobs numbers released Friday morning, four days before the presidential election. These numbers affirm that Americans were probably right to focus on other things during this election. The United States still has plenty of problems and economic challenges. But they are more of the long-building variety than the get-us-out-of-this-slump variety.The unemployment rate edged down to 4.9 percent in October, continuing a remarkably stable run (it has been either 4.9 percent or 5 percent for 12 of the last 13 months). Employers added 161,000 jobs, broadly consistent with the pattern over the last year; job creation estimates for September were revised upward.The biggest and most pleasant surprise in these numbers is evidence that workers’ wages are rising faster than they have through seven years of expansion. Average hourly earnings for private sector workers rose 0.4 percent, and are up 2.8 percent over the last year. It suggests that the many anecdotal reports that employers were needing to increase pay to attract workers are more than just anecdotes.It is also true that inflation is starting to edge up, which means that in terms of buying power wages aren’t really rising any faster than they were a few months ago. But if you think of inflation trends lately as being driven mostly by swings in energy prices, you’re left with the good news that American workers seem to have the leverage to demand higher pay from their employers. That’s what you’d expect from more than a year at a 5 percent unemployment rate, but wage gains have been slow in coming.There is less good news in the report as well. The October numbers partly reversed progress that was evident in the September report on the number of Americans who were part of the labor force. A whopping 444,000 more people said they were either working or looking for work in September than August, but that number fell by 195,000 in October. For the truth of the matter, it’s probably best to average the two months and assume that higher wages are indeed coaxing people into the labor force, but at a more gradual pace than the September report suggested. Wages Are Rising the Fastest in Years Pay is rising faster than it has so far in the current expansion.Year-over-year change in average hourly earnings%+2.5+2.0+1.5+2.8%201120122013201420152016For all private-sector employeesSource: Bureau of Labor StatisticsWhere does that leave a proper understanding of the state of the United States economy on the eve of an election?The current economic expansion may be the most maligned in history. Among the complaints: It has been too weak, too slow, too uneven; it has been accompanied by people dropping out of the labor force; it hasn’t brought meaningful income gains; it is driven entirely by the sugar high of monetary stimulus from the Federal Reserve.And these statements aren’t wrong. It really has been painfully slow, particularly given the depth of the 2008-9 recession from which the United States has been recovering these last seven years.But it’s worth pausing to look at what has been achieved. Some 95.1 percent of Americans who tell survey-takers that they want a job are working. And they are finally starting to get the bigger paychecks they have long hungered for. It took a long time getting here, but the problems in the economy don’t have much to do with recessions and recoveries anymore. They’re about deeper questions of how best to improve the nation’s long-term economic potential.In particular, the biggest lingering weakness in the employment picture is in the millions of people who have left the labor force entirely — not just in October, but over the last seven years. Only 59.7 percent of American adults were employed in October, down from 62.9 percent at the start of 2008. A big part of that decline is demographic: baby boomers hitting retirement age. But millions of people dropped out of the labor force entirely during and after the recession and have not returned to the work force.One possibility is that rising wages will serve to pull those people into the labor force; somebody who is unwilling to look for a job when the best thing available pays $10 an hour might feel differently about $12. Another possibility is that the problem of labor force dropouts is more deep-seated and complex than mere higher wages can fix.Either way, trying to get more Americans into the labor market will be a first-order goal if the next president wants to build on the sound economy he or she will inherit. The decision voters face is over which candidate’s long-term vision they find most compelling for doing that.
