Christmas Comes Early for US Workers

Some economists had expected a rebound in the job market, but the Bureau of Labor Statistics (BLS) has given job-seekers a larger-than-expected early Christmas present. The November jobs report released today estimates that the economy added 266,000 net jobs last month, and revised the estimates for September and October upward by a combined 41,000. At this point, 205,000 net jobs have been added to the economy over the last three months—close to the average monthly job increases seen last year (223,000), which had been tapering off in 2019.

A substantial part of this increase is due to 46,000 striking General Motors workers resuming their jobs in the wake of a new agreement between the auto company and the United Auto Workers union. But even subtracting the returning strikers leaves a surprising increase. And since the BLS estimates are seasonally-adjusted, they control for the effect of holiday season jobs.

Given the way the US economy has been evolving over the last few decades, it’s not surprising that most of the new jobs created in November were in service-providing industries. Indeed, employers in the “healthcare and social assistance” and “leisure and hospitality” industries were responsible for the lion’s share of new hires (60,000 and 45,000), while “transportation and warehousing”, “information”, “financial activities”, and “government” added respectable amounts of jobs as well (12,000-16,000).

But while the job gains are certainly good news, no one knows how long the US economy—in the longest expansion yet recorded and with unemployment rates at a 50-year low—can continue to find the right workers for new jobs. There are consistent reports from various industries around the country that appropriately-skilled workers are increasingly hard to find. And while this high demand is beneficial for workers who have the relevant skills, pushing up the wages that companies are willing to pay and the benefits they offer, the shortage of any resource can lead to a stifling of future economic growth.

Luckily, there’s a relatively easy change that Congress could make to the tax code which would allow employers to treat training a worker for a new job as a business expense (which, currently, they are specifically prohibited from doing). Allowing employers to expense training would help ease the “skills gap” in the economy, helping businesses to staff up to meet the needs of their customers, while providing a better path for workers to re-skill and change careers, enhancing the dynamism of the US economy.

Regardless of how long the good news lasts, November’s stellar jobs report will undoubtedly be considered by members of the Federal Reserve when they gather next week for their final interest rate setting meeting of the year.

Quick Statistics from the October 2019 BLS Jobs Report

Headline Employment Statistics

• Total nonfarm payroll employment increased by 266,000 jobs.
• The labor force participation rate fell by 0.1 percentage points to 63.2 percent.
• The headline unemployment rate (U-3) fell by 0.1 percentage points to 3.5 percent.

Other Unemployment Rates

• 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) fell by 0.1 percentage points to 3.7 percent.
• The comprehensive jobless rate (U-5b) held steady at 6.3 percent.

Deeper Unemployment Statistics

• The number of unemployed workers fell by 44,000 to 5.8 million.
• The number of people who say they want a job but were not actively seeking work increased by 78,000 to 4.8 million.
• Short-term unemployed workers (under 15 weeks) increased by 60,000 to 3.8 million, accounting for 64.3 percent of those who are unemployed.
• Long-term unemployed workers (27 weeks or longer) fell by 40,000 to 1.2 million, accounting for 20.8 percent of those who are unemployed.

Full-Time vs. Part-Time Employment Statistics

• The unemployment rate for those specifically seeking full-time work held steady at 3.5 percent.
• The unemployment rate for those specifically seeking part-time work held steady at 3.8 percent.
• The number of people who wanted to work full time, but who could only find part-time work for economic reasons, fell by 116,000 to 4.3 million. The part-time workers who wanted full-time employment constituted 16.7 percent of all part-time workers.

Wages

• Average hourly earnings (for all private, nonfarm employees) rose by 3.1 percent over the previous 12 months.
• Average weekly earnings (for all private, nonfarm employees) rose by 3.1 percent over the previous 12 months.

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