What's Bigger Than an Economic Boom?

Today's jobs report will be a surprise to many Americans and economists, not because concerns about the effect of trade barriers and increased government deficits are finally showing up in reduced job economic growth, but rather because they aren't.

Employers hired 312,000 more workers in December, over 40 percent more than generally expected, and the employment reports from October and November were increased by another 58,000 over previous estimates.

The fascinating part of this story is that the unemployment rate rose 0.2 percentage points (to 3.9 percent) in the midst of this surge in jobs creation. In addition to the 312,000 newly-hired workers, there were another additional 276,000 who were actively seeking employment. Since the US population only grew by 180,000 between November and December, this indicates that workers are continuing to come off the sidelines and rejoin the labor force. The labor force participation rate correspondingly rose by 0.2 percentage points (to 63.1 percent).

Women Leading the Way

But even more interesting is the fact that women fueled the increase in jobs, while men were responsible for the increase in unemployment (at least for last month). Adult women’s (20 years and over) employment increased by 269,000 while the number of unemployed adult women increased by 21,000. Adult men’s employment dropped by 132,000 while the number of unemployed adult men increased by 224,000. This is part of a larger trend—over the last year women have filled about 60 percent of new jobs. This odd result may partially reflect the effect of retirements since the baby boomer generation has a higher male-to-female employment ratio, but that explanation alone doesn’t seem sufficient for the size of these changes.

Wage growth continued to creep upward as well, with average hourly earnings increasing by 3.2 percent over the year, and average weekly earnings increasing by the same amount. Many pundits have expressed concern that wages aren't rising faster in an economy with such low unemployment, but the torrent of new jobs being filled month after month (220,000 new jobs per month on average over the last year) shows that, in general, employers aren't having substantial problems attracting new workers. 

Despite all of this good news, the real question becomes: “How much better would the economy be doing now if the economic headwinds of trade wars and deficit uncertainty weren’t holding growth back?” We might have to invent a bigger word than “boom.”

Quick Statistics from the December BLS Jobs Report

Headline Employment Statistics

• Total nonfarm payroll employment increased by 312,000 jobs.
• The labor force participation rate increased by 0.2 percentage points to 63.1 percent.
• The headline unemployment rate (U-3) increased by 0.2 percentage points to 3.9 percent.

Unemployment Statistics

• The mid- to long-term unemployment rate (15 weeks or longer; U-1) held steady at 1.3 percent.
• The discouraged worker unemployment rate (U-4) increased by 0.1 percentage points to 4.1 percent.
• The comprehensive jobless rate (U-5b) increased by 0.1 percentage points to 6.9 percent.

Deeper Unemployment Statistics

• Long-term unemployed workers (27 weeks or longer) increased by 47,000 to 1,306,000; the proportion of long-term unemployed workers fell slightly to 20.5 percent of those who are unemployed
• The number of people who wanted to work full time, but who could only find part-time work for economic reasons, fell by 124,000 to 4,657,000, which was 18 percent of all part-time workers.

Wages

• Average hourly earnings rose by 3.2 percent over the previous 12 months.
• Average weekly earnings rose by 3.2 percent over the previous 12 months.

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