February Jobs Report beats odds, still problematic

The February Jobs Report released on Friday has given wild hope to many with the addition of 3130,000 jobs added to the economy and most observers have been jubilant and The New York Times proclaimed “healthy job creation” and “swelling workforce” in its coverage, and all that was missing was the blare of trumpets as the soundtrack soared in the background.

Estimates had been that there would only be 205,000.

Certainly, the banner unemployment rate holding at 4.1 percent represented a good number to work form especially from the White House, where President Trump tweeted: “Jobs! Jobs! Jobs!”

The brightest spot in this mixed report - was that wages increases to 0.1 percent, a long held hope as wages had stagnated or flattened over the previous months and many were hoping to see more. While this is not in the “much more” category, any movement upwards was welcome news.

“A strong jobs report with less wage inflation tells the market that the current concern about the wage issue is overblown,” said Jonathan Golub, chief United States equity strategist for Credit Suisse.

For the other eager beavers out there, it also suggested that there might be a fourth increase by the Federal Reserve  in the benchmark rate; but that is still speculative at this point.

Golub was quick to point out to the Times that this increase was not attributable to the tax cuts bill, but yet instead to the “synchronized” global economic expansion since 2016.

For some the news is useful in establishing a baseline to monitor the impact of the trade deficits proposed by Trump,and the resulting restriction and retaliation that will occur, if his proposal continuing as planned.

It may also help, say others, for flexibility and accommodation, as time goes by

Even others, further still, see that a more sustained progress is what is needed to see real progress; but with most looking for any silver lining the cloud of the Great Recession.

Elise Gould, a senior economist at the Economic Policy Institute, which tracks average worker pay, said the hourly increase in February’s report was “relatively disappointing,” compared to monthly wage bumps before the last downturn,” to the Washington Post, where she also said: “Year-over-year wage growth, she said in an email, “needs to exceed 3.5 percent for a substantial amount of time for workers to begin to claw back losses in the labor share of income they’ve felt during and since the Great Recession.”

Consumer spending did rise by .4 percent giving some impetus to optimism, yet there is also a real challenge, wages, for once, but also labor force participation, which did increase to 6.27 percent, after the needle barely moved from 6.1, at its highest, for months preceding February.

Growth was seen in hospitality and tourism and in that catch-all, but ill defined category, of business services, and retail which boomed at 50,000, but a closer look shows that these are lower level jobs. In fact, such retailers as Walmart, Target, CVS Health and Starbucks have increased their wages, as well as states such as Ohio, Washington, and Maine.

As the old game show show said: “What is the $64,000 question?” regarding the low rate of labor force participation, and the answer is complicated, there are some employers who have openings but can’t fill them, despite offering higher wages, less strictures about pot smoking, etc. is that many employers cannot find workers with the required skills. This was as true for February, as it was in the last quarter.

Quoted both in the Post and the Times was “Brian Krenke, president of KI Inc, a furniture maker in Green Bay, Wisc., said his firm has raised wages and expanded its recruiting efforts into high schools but still struggles to fill vacancies.”

“In the next 90 days, we need to identify and train 390 employees to do skilled positions,” Krenke said. “But individuals are failing drug tests and that, combined with low unemployment, makes it hard to find people.”

“Economists point out that Baby Boomers are retiring faster than young people are entering the workforce to replace them, but they still don’t know why so many workers appear to be stuck on the sidelines. Some blame the opioid epidemic, which, studies show, has knocked a chunk of potential hires out of the workforce.

One alarming example: “the number of truck drivers, commercial pilots, railroad operators and pipeline workers who failed drug tests in 2017 has spiked 77 percent since 2006, according to federal data,” continued the Post.

Another angle says “Economist Heidi Hartmann, president of the Institute for Women’s Policy Research, said the rising price of childcare, combined with a decade of slow wage growth, keeps some workers from seeking jobs.

“If they can’t afford childcare, they’re not going to work,” she said. “If they can't make enough to pay for a car or the bus fare, they’re not going to work.”

Others cite that while growth has been seen on the coasts there has not been as much in central parts of the country, or south central and that moving to a high growth area necessitates paying higher housing costs for a salary that may not cover the new salary, and for even more, the costs of transferring government program like Medicaid may prove to be burdensome.

A group of national economists see this as a hardening of the economy with little wiggle room for other areas that see less growth, yet even others see February as being hugely important and that “Two of the most important household surveys were at their best level in almost ten years,” said Jed Kolko chief economist at Indeed, an online recruiting tool.

We can accept these numbers as more indicative of growth in some geographic areas, and in some jobs, but the outliers are too great for us to ignore, and this pockmarked growth needs to see, as Gould states, a more sustained pattern, before a total recovery from the Great Recession can be fully recognized.