June Jobs report still shows a tight labor market

Resilient, durable, and solid are just a few of the adjectives that highlight the June Jobs report released by the US Labor Dept, on Friday, but much like the three previous months, nothing significant has changed, and even with the 209,000 non farm jobs gained, the news of a slight reduction in the unemployment rate from 3.7 to 3.6 might give a glimmer of hope for a reduction in inflation, it is not enough, and it is widely anticipated that at its July meeting the Federal Reserve will give yet another rate increase.

The lessening of the unemployment rate got mixed reviews from some economists and observers but it was mixed at best. For some, the job losses were notable for the reduction in retail and tech services, a trend that we have seen before. But, equally concerning was that wages increased slightly to 4.4 percent but gave only a slight edge ahead of the inflation rate, currently at 4 percent.

Those sleepless nights for Fed Chair Jerome Powell will continue as he predicted that it was going to be a long slog to bring prices down to the 2 percent inflation that is the mandate of the Reserve.

As he noted in June, “there is a path to setting inflation back down to 2 percent without having to see the kind of sharp downturn and large losses in employment.”

Those early predictions of a soft recessionary landing that Powell noted along with Treasury Secretary Janet Yellen, from 14 months ago, may yet come to pass.

A big surprise was that while factories fell flat, new home sales rose despite high interest rates and for a 30 year fixed rate rising from 6.39 to 6.57, and for new homes, there was a gain of 23,000 jobs in construction alone, further emphasizing the conundrum that is the US economy.

There was some solid footing in the report, those of prime working years, ages 25 t0 54 shot up to its highest level since May of 2002, at 80.9 percent.

The US, like most of Western Europe, is facing the challenges left from the covid pandemic, and the increase in service costs has increased in areas such as airline travel, (on June 30th, TSA screened 2,884,783 passengers) as well as the cost of dining out, but with higher wages exceeding inflation, the increase is a gut punch for the former, and a pinch for the latter; and, especially for an industry that is in recovery from the decimation of the pandemic and lockdowns. But, Americans seem unabated in their quest for travel and restaurant meals.

Another surprise was that those of prime working ages, 25 to 54, increased 75.3 percent in June, the highest in the US since 1948. And, leading the pack were women hit 77.8 percent, with Black women at 60 percent.

While there are still less child care workers, employees, according to an NPR report, have bargaining power, and employers are willing to be flexible between hours worked to accommodate family life and remote working, for those that can.

CNN reports that this was “the third consecutive month that the participation rate for women between the ages of 25 and 54 has set a record high.”

Traditional roles for working women increased, they added, and included healthcare at a fast clip, as well as educational gains, and “greater inroads into traditionally male dominated fields such as construction, agriculture, and repair and maintenance.”

The bad news? Women are still making less than men, “about 82 cents for every dollar a man earned, according to a Pew Research Center report released in March.”

US celebrates surge of 467,000 jobs in January

 Shocks can happen, and they can happen to the US economy in more ways than one, and one that has some economists reeling, and President Joe Biden exultant, as the January Jobs Report revealed “the U.S. gained 467,000 jobs in January despite fears the economy lost jobs amid the omicron-driven surge of COVID-19 cases, the Labor Department reported Friday,” according to The Hill, on Friday.

After a moribund report last month, many feared, including the White House, that the US economy was going further south in a dip that would further damage the pandemic riddled country.

Even more remarkable is that 6 million Americans missed work either due to being ill with Covid, or were taking care of someone who had it, double the amount from December, and some economists are saying that resilience is the key to the US economy.

The New York Times also reported that “America has recorded 6.6 million new jobs since January 2021, giving Mr. Biden the strongest first year of job gains of any president since the government began collecting data in 1939. The unemployment rate has dropped precipitously since the worst of the pandemic, and wages rose a rapid 5.7 percent in the year through January.”

This news comes at a good time for the president as he faces falling poll numbers with a load of policy and performance gaffes, both perceived and real, in his first year in office, leading with the pullout from Afghanistan and high inflation, not his fault, say many, but as Harry Truman noted the buck stops at the Oval office; and, many are blaming him for the economy, as much as any president can be blamed for single handedly moving the needle on the economic dial.

While the Federal Reserve has shown that it will probably raise interest rates in March to stem the tide of inflation, all eyes will be on the demands that consumers face in the coming months, as increased wages, depending on geographic location, might be eaten up with inflated prices, from groceries to housing.

Wages rose by 23 cents to an average hourly wage of $31.63, but for those at, or even below, there are discrete challenges in how they will be spent.

Increased rents are a major factor, especially since many are leery of buying a home; and, for people of color, rental increases will show increased pressure on the family budget

Last year the National Low Income Housing Trust, in a long-term study, found that minimum wage earners faced increasing demands to meet even basic housing needs:

“In no state, metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at fair market rent by working a standard 40-hour work week,”

This is even more true in 2022, than ever, and as they stressed, “Meanwhile, affordable units are increasingly rare. An analysis shows that only in 218 of more than 3,000 counties nationwide can a full-time minimum wage worker afford a one-bedroom rental home at fair market rent without dipping into income that should be used for all other living expenses and savings.”

And, just to even things out, they added this: “Even in places where a higher minimum wage has been implemented, lower income non-homeowners face extreme financial hardship. California, where 45% of households are living in rentals, ranks number one as the most expensive rental market, despite the fact that the statewide minimum wage is as high as $14 an hour, depending on the size of the company.”

With the rising price of used cars reaching nearly a $5,000 increase, it will be hard to absorb January’s numbers outside of the context of inflation, and Powell and Treasury Secretary Janet Yellen will have to keep their eyes on the till to ensure that wage inflation does not occur, a concern shared by Federal Reserve Chair Jerome Powell.

Overall, while many economists have praised the report, after expecting a loss of 5,000 or more, the revisions that were given to both November and December (647,00 and 510,00 respectively) have given a bump to the emotional reaction of economists, as witnessed by Becky Frankiewicz of Moody’s who said, “We’re seeing a more robust, more prosperous U.S. Labor Market,” but there are still concerns.

One of the more salient is that women have not made gains in the market as much as men have, once again showing the lack of subsidized child care and the patchwork of COVID protection for schools, resulting in some school closures that causes many parents, especially single mothers, balancing work responsibilities, and childcare is a never ending battle.

CNBC reported that “New research from the National Women’s Law Center shows that over one million men joined the labor force in January, compared to just 39,000 women. 

Men have now recouped all of their job losses since the pandemic began, while women are struggling to catch up. There are nearly 1.1 million fewer women in the labor force now compared to February 2020, the NWLC reports.”

“This report was not a pleasant surprise,” Jasmine Tucker, the NWLC’s director of research, tells CNBC Make It. “While I was happy to see the boom in hiring, the sharp contrast in men and women working or seeking jobs is baffling and incredibly troubling.”

In addition, “Of the 467,000 jobs added to the economy last month, 188,000 (about 40%) went to women. The NWLC estimates that it would take about 10 months of growth at January’s rate, however, for women to recoup all of their pandemic job losses.”

Going deeper into the report, we see the following,”Retail trade and leisure and hospitality saw significant job gains last month, adding 61,400 and 151,000 new positions, respectively. Women only gained 52,000 jobs in leisure and hospitality, or about 34%, but took 45,000, or about 73%, of the jobs added in retail trade. Women lost 17,000 jobs in the education and health services sector, while men gained 29,000.” 

“It’s clear from these numbers that child-care and school closures have hardly impacted men,” Tucker says. “Women are shouldering the impact of these disruptions, and it’s leading to a huge disparity in their ability to work.”

On the macro side, the US, there are still 2.9 million fewer jobs than before March 2020, making gains while, at first glance significant, but still needing moxy to give Biden’s remark that “America is back,” some real gas.

Omicron is the culprit here and with low vaccination rates across many parts of the country, the South, in particular, it has made women’s work that much harder to obtain, or balance.

This is especially true for Black women who are continuing to look for work, albeit, a struggle and as The Washington Post said, “Those numbers were led by Black workers, specifically Black women, whose participation rate jumped eight-tenths of a percentage point for the month, to 61.9 percent.”

“I don’t think anybody would dispute that we’re moving in the right direction,” said Valerie Wilson, labor economist at the left-leaning Economic Policy Institute. “That being the case, as we often see, there are pretty significant differences in terms of the pace of recovery by race and ethnicity.”