The job-growth engine rolled into the final station of the Obama administration much the same way as it has chugged along since the recovery in June 2009 — just fast enough to keep pace but without much momentum. The Bureau of Labor Statistics reports that the US economy added 156,000 jobs in December, a miss on expectations and just above the pace needed to keep up with population growth. That’s about the same average as job growth over the past seven-plus years of recovery, although there was brighter news in wages:
Total nonfarm payroll employment rose by 156,000 in December, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Job growth occurred in health care and social assistance.
In the 90 months since the beginning of the recovery, the US has added 14,283,000 million jobs [see update], according to the seasonally adjusted data from BLS. That works out to 158,700 jobs per month, barely enough to keep pace with population growth. That’s one reason why the civilian workforce participation rate has dropped in that period from 64.7% to 62.7%, a level we last left in the 1970s. Some of that drop is structural with an aging population, but much of it reflects the dissipation of workers without opportunities to find employment after the Great Recession.
Job-growth rates improved after the first year of recovery, but never caught fire as in previous recoveries. In fact, 2016’s job-growth rate dropped significantly from 2015, as Reuters reports. However, they credit the slowdown to, um, full employment:
Economists polled by Reuters had forecast payrolls rising by 178,000 jobs last month and the unemployment rate ticking up one tenth of a percentage point to 4.7 percent.
Employment growth in 2016 averaged 180,000 jobs per month, down from an average gain of 229,000 per month in 2015. The slowdown in job growth is consistent with a labor market that is near full employment.
There has been an increase in employers saying they cannot fill vacant positions because they cannot find qualified workers. The skills shortage has been prominent in the construction industry.
Er, suuuure. Construction employment has picked up over the past few years, rising from 5.467 million at the end of 2010 to 6.699 million now, but that’s still far below the 7.685 million employed in construction in 2006 or even the 6.7 million at the end of 2007, at the depth of the financial-market meltdown. Over the last year, we’ve added 1.2 million people to the “not in labor force” category, and over 400,000 since October alone.
The Associated Press notes a legitimate bright spot on wages, and implicitly debunked the “full employment” argument:
Though the unemployment rate rose to to 4.7 percent from a nine-year low of 4.6 percent, it did so for an encouraging reason: More people began looking for work. Because not all of them found jobs immediately, more people were counted as unemployed in December.
Hourly pay jumped 2.9 percent from a year earlier, the biggest increase in more than seven years. That is a positive sign that the low unemployment rate is forcing some businesses to offer higher wages to attract and keep workers. Sluggish growth in Americans’ paychecks has been a longstanding weak spot in the seven-year economic recovery. …
A smaller share of Americans either have a job or are looking for one than before the recession. That is particularly true for men. Many men, especially those without a college education, have suffered as the job market has shifted away from blue collar work such as manufacturing and mining toward industries that either require higher skills, like information technology, or that pay less and are dominated by women, such as health care.
Though the unemployment rate has returned to its pre-recession level, the proportion of Americans in their prime working years who are either working or looking for work remains far below where it was before the recession began. When people stop looking for a job, they’re no longer counted as unemployed. Those “dropouts” have contributed to a declining unemployment rate over the past eight years.
It’s not “full employment” that has job-creation stalling. We have an ever-increasing number of sidelined workers, thanks to a lack of economic incentives to employ them. This is the economic stagnation we have seen for years, and which Obama will hand off to Donald Trump, along with some media outlets who remained incapable of reporting on it honestly to the end.
Update: I transposed two digits in my calculations of job growth over the last 90 months. The figures have been updated.