Employers Report Strong Job Growth, Unemployment Holds Steady

Roy Maurer By Roy Maurer December 8, 2017
Employers Report Strong Job Growth, Unemployment Holds Steady

The U.S. economy added 228,000 jobs in November, marking 86 months of consecutive job growth, and the unemployment rate remained at 4.1 percent, its lowest level since 2000, according to the Bureau of Labor Statistics (BLS).

Wages, long limited during an otherwise strong recovery, rose by 5 cents to $26.55, or by 2.5 percent over the year.

The report shows a strong labor market with momentum, said Jed Kolko, chief economist for global job search engine Indeed. And it's not just a continued rebound from the hurricanes, he said. "Last month was nearly the largest payroll gain of the year after excluding weather-sensitive sectors."

The gains are widely shared, Kolko added. "The broadest measure of whether people are working—the prime-age employment population ratio—reached 79 percent, a post-recession high. Employment has risen most for people with a high-school degree or less, and wages rose most in lower-wage industries."

Cathy Barrera, chief economist for online jobs platform ZipRecruiter, found the BLS results for November more "middle-of-the-road." She pointed out that while the number of new jobs beat expectations, labor force participation and unemployment stayed the same, and while month-over-month wage growth dipped, year-over-year wage growth is consistent with previous reports.

"So more or less we're plugging along," she said.

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Professional and business services added 46,000 jobs in November and 548,000 jobs over the past 12 months.

Thirty thousand health care jobs were added in November. Most of the gain occurred in ambulatory health care services (+25,000), which includes physicians' offices and outpatient care centers. Monthly employment growth in health care has averaged 24,000 so far in 2017, compared with an average increase of 32,000 per month in 2016.

Manufacturing added 31,000 jobs and received a special callout in the report and from the White House. "We're especially pleased to see the manufacturing sector roaring back to life, adding a total of 159,000 jobs since President Trump took office after averaging a loss of more than 1,000 jobs per month during the last year of the previous administration," said Sarah Sanders, White House press secretary.

"That generally surprises people, as there is a cultural storyline that manufacturing is declining when actually over 200,000 jobs have been added in that sector over the last year," Barrera said.

She added that the growth in manufacturing could be related to new technologies and manufacturing techniques making it more affordable to produce in the U.S., and an uptick in jobs being reshored from abroad.

Temp Growth Up

In November, U.S. employers added 18,300 temporary jobs, representing a year-over-year increase of 3.9 percent. Year-to-year contingent labor growth has averaged 4.1 percent per month over the past 11 months, significantly higher than the average of 1.4 percent for all of 2016.

"November's strong employment figures include a sizable contribution from freelancers, gig workers and independent contractors hired to fill a broad range of critical positions this holiday season," said Rebecca Henderson, CEO of talent acquisition, consulting and outsourcing firm Randstad Sourceright. And recent research shows employers plan to take advantage of contingent labor in the new year as well.

"Based on Randstad Sourceright's recent survey, more than 60 percent of companies expect to shift up to one-third of their overall workforce to contingent talent in the near future," Henderson said.

Teen Unemployment on the Rise

The number of unemployed people in November stood at 6.6 million. Over the year, the number of unemployed workers declined by 799,000.

The jobless rate for teenagers shot up between October and November from 13.7 percent to 15.9 percent. The unemployment rates for other demographic categories—adult men (3.7 percent), adult women (3.7 percent), Asians (3.0 percent), blacks (7.3 percent), Hispanics (4.7 percent) and whites (3.6 percent) stayed the same. The number of long-term unemployed—jobless for 27 weeks or more—also held at 1.6 million and accounts for 23.8 percent of the unemployed.

The number of individuals categorized as involuntary part-time workers—seeking full-time employment but working part time—also held at 4.8 million in November.

Additionally, 1.5 million people were considered marginally attached to the labor force; they are unemployed but want and are available to work, and had looked for a job sometime in the previous 12 months. Among this group, 469,000 individuals were considered discouraged—not currently looking for work because they believe no jobs are available for them.

The remaining 1 million people marginally attached to the labor force in November had not searched for work in the past month for reasons such as school attendance or family responsibilities, according to the BLS.

Wages Lag

After more than seven years of job gains, wages have been frustratingly stagnant. "Everyone is looking for a bit more in wage growth," Barrera said. She outlined three factors holding wages back:

Lack of competition. "Turnover rates are much lower than they have been in past times when we've seen an unemployment rate that is near 4 percent," she said. "We haven't been seeing over the past year the kind of mobility in the labor market that generates competition that would push wages up. We aren't going to see those wages driven up without competition."

Part-time work. Part-time jobs have historically had a lower wage growth rate than full-time jobs. "While there are over 6 million job openings, we don't know much about what types of jobs those are," Barrera said. "We do know that the number of people working part time for economic reasons is about 78 percent higher than it was in 2001, the last time we saw unemployment near 4 percent."

Entry-level slack. Young workers between the ages of 16-24 are still lagging far behind where they were pre-recession in labor force participation and unemployment," Barrera explained. "With a large pool of relatively inexpensive labor to choose from, there is less pressure on employers to raise wage offers."

There are some positive indicators that things could be headed in the right direction however. "We are seeing a slow rise in the labor force participation rates of young people, around 1-1.5 percent over the last 18 months," Barrera said. "This, combined with increased opportunities for entry-level experience, shows that the youngest cohort is starting to be able to get their foot in the door when it comes to employment."

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