U.S. Adds Whopping 312K Jobs in December

Pay—especially for low-wage workers—continues to climb

Roy Maurer By Roy Maurer January 4, 2019
U.S. Adds Whopping 312K Jobs in December

​Labor market economists were expecting a strong finish to 2018, but the latest employment report from the U.S. Bureau of Labor Statistics (BLS) blows those forecasts out of the water.

U.S. employers added 312,000 jobs in December 2018, capping a spectacular year of job growth. Wages rose 3.2 percent year-over-year, and the unemployment rate ticked back up to 3.9 percent as more people returned to the labor force.

The economy added 2.6 million jobs in 2018, besting the previous two years for growth.

"2018 closed out with a bang," said Martha Gimbel, research director for Indeed's Hiring Lab. "The jobs number … left many of us speechless," she said. "Job growth last month pushed overall average monthly job growth in 2018 to 220,000, close to what it was in 2015, earlier in the recovery." 

Moody's Analytics and the ADP Research Institute reported Jan. 3 that private-sector employment grew by a significant 271,000 jobs in December, based on ADP payroll data from over 400,000 organizations in the U.S.

"Businesses continue to add aggressively to their payrolls despite the stock market slump and the trade war [with China]," said Mark Zandi, Moody's chief economist. "Favorable December weather also helped lift the job market," he added.

Michael Farren, a research fellow at the Mercatus Center at George Mason University, noted that employers hired over 40 percent more people than generally expected, and the employment totals from October and November were increased by 58,000 jobs.

"The strong ADP report and today's BLS report should assuage fears about a slowdown in the labor market," said Julia Pollak, labor economist at online employment marketplace ZipRecruiter. "Job growth on Main Street continues to be robust, despite uncertainty on Wall Street," she said, referring to the fourth-quarter 2018 stock market slide that began in October.

Gimbel pointed out that the good news likely can't last. "Eventually, job growth is going to start slowing down," she said. "When that happens, we shouldn't panic. In the meantime, we should enjoy the ride."

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Hospitality, Health Care Lead Sectors

The BLS reported solid job gains across a variety of industries in December.

"Although there were increases in most sectors, the busy holiday season greatly impacted leisure and hospitality," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Small businesses also experienced their strongest month of job growth all year," she said.

Leisure and hospitality employers led the way, adding 55,000 jobs in December, followed by health care (50,000 jobs), professional and business services (43,000 jobs), construction (38,000 jobs), manufacturing (32,000 jobs), and retail (23,800 jobs).

In addition, retailers hired 576,800 seasonal employees during November and December, according to the National Retail Federation (NRF). That's lower than the organization's forecast in October that temporary holiday employment would total up to 650,000 jobs. "Retailers would have been happy to hire more seasonal workers if they could have found them," said NRF Chief Economist Jack Kleinhenz. "Our industry continues to have more job openings than applicants, even for full-time positions."

More People Looking for Work

The unemployment rate crept up from last month's 3.7 percent, fueled by an influx of people seeking new opportunities. "The nation's strong economy pulled new workers back into the job market in December, with roughly 419,000 workers joining the labor force," said Andrew Chamberlain, chief economist at Glassdoor. "The nation's lagging labor force participation rate increased in December to 63.1 percent, up from November's 62.9 percent."

The labor market is still not tapped out, Pollak said. "There are still unemployed people looking for work, and new workers to be brought off the sidelines. We have made steady gains in terms of reducing unemployment and underemployment over the past year, but long-term, structural unemployment remains elevated," she said. "The long-term unemployed make up 20 percent of all unemployed but were only one-twentieth of the unemployed in 1969, the last time we had unemployment of 3.7 percent."

Experts pointed out that women are benefiting from the increase in jobs. "Over the last year, women have filled about 60 percent of new jobs," Farren said. "Adult women's employment increased by 269,000 in December while adult men's employment dropped by 132,000. This odd result may partially reflect the effect of retirements, since the Baby Boomer generation has a higher male versus female employment ratio, but that explanation alone doesn't seem sufficient for the size of these changes."

Pollak surmised that employers in a tight labor market are having to offer more attractive working conditions, like flexible scheduling, which can be an attractive benefit for women with children, and that more women are also entering previously male-dominated fields across a range of industries.

Wages Rise

Average hourly earnings increased 11 cents in December to $27.48, the third-straight month that year-over-year wage growth rose above 3 percent. Earnings rose by 84 cents over the year.

"Wage growth continued to accelerate this month," Gimbel said. "More importantly, wage growth was concentrated among workers in lower-wage industries."

Glassdoor's Local Pay Reports showed median pay for full-time workers rising at 3.5 percent to 4 percent annually in tech-heavy coastal metros such as San Francisco and New York City.


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