November Jobs numbers high, but wages still low

Aided and abetted by the return of over 413,000 General Motors strikers the U.S. economy hit a headline grabbing 266,000 non-farm jobs in Friday’s report by the Labor Department, for November, giving bragging rights to President Donald Trump in his bid for reelection, and a push back against the Democrats, in the court of public opinion, and their path towards impeachment.

A euphoric Trump tweeted, “It’s the economy, stupid,” and the White House website released an equally euphoric statement, without the invective.

“Because of the Trump Administration’s pro-growth policies, high labor demand is leading to increased employment and growing wages as businesses raise pay to attract workers,” it noted.

On the economic forefront, Friday’s news also got considerable support from some economists, and exceeded their polled predictions of an increase of 180,000, plus an extended round of hurrahs from observers.

“I think that this report is a real blockbuster,” said Daniel Zhao, senior economist at the career site Glassdoor. “Payrolls smashed expectations,” reported The New York Times.

There is still considerable slack in one key area - wages  - which while rising year-over-year by 3.1 percent, only increased 0.2 for November, a sum that is statistically inconsistent with a recovery - especially one that is 11 years old.

Most of that wage increase is seen on the lower level job scale, and especially in the service sector, where workers are subjected to long hours, often on their feet, and performing messy, and often dangerous duties.

Getting to a mid-level income has become hard, and often the obstacles by age, gender and race are compounded by downsizing and moving employees off the payroll and to contractor status, leaving many struggling.

The more accurate U-6 report, which shows both discouraged workers and those that are stuck in part-time jobs was 6.9, an increase from the October rate of 6.5 percent, and was 7.3 in July and August, showing only a slight improvement.

Labor Force Participation Report showed another dip, albeit slightly from 63.3 percent to 63.2 percent giving meager encouragement to those not compromised by age, or gender, but did reflect a growing increase in older baby boomers who are working long past retirement age, in an era of not only income inequality, but also growing housing costs.

There has been a brief reversal in labor force participation, for one city - Chicago, and in a recent report from the Chicago Metropolitan Agency for Planning, showed an increase in LFP - excluding 16 to 24 year olds - by one percent for the 25 to 45 year old age range; a slight increase than for Boston, Los Angeles, New York and Washington, DC.

A less clear, and highly debated, estimation of who is working remains the subject of debate for many professional economists, and as we have seen there is a distinct gender gap, with more women entering the workforce than men, partly attributable to the lowered wages, but also the focus on service jobs, where men are more reluctant to accept.

The wage gap is still ironic considering the tight labor market, where usually employers give higher wages to keep them from leaving, but even with greater competition by employers for employees, those seeking highly skilled areas are feeling the pinch, since it seems that most are working, yet there is some light for those who are working seasonally, in the hope of permanent status.

“Historically, about 4 percent to 7 percent of seasonal workers are hired, said Amy Glaser, senior vice president of the staffing firm Adecco. This season, she expects that 20 percent could be retained after the new year,” in her interview with the Times.

Race is still a factor for Black Americans, despite recent gains, still faces historical and persistent compromises -- often seeing a segmented workplace, and lowered wages, with Black women facing dual discrimination, as the Center for American Progress recently noted.

“The trend toward ever-lower unemployment rates should not obscure the fact that African Americans systematically suffer higher unemployment rates than whites, even in a good labor market. The unemployment rate for Black workers remains higher than that for white workers even when looking at subpopulations.”

Manufacturing came in at 41,000 - but still lower than desired, and “When you look globally, there are some tentative signs that the global manufacturing slowdown is bottoming out,” Michael Gapen, chief United States economist for Barclays, said. “But it may take the U.S. manufacturing sector a little longer than the rest of the world to stabilize,” he told the Times.

To be realized, manufacturing, in a global economy, is supported by a vast network of suppliers, so that a car made in America, might have parts from other countries as far flung as Eastern Europe, or China, and the Trump trade war with China, shows no signs of abating and with this month’s job report some have guessed there will be less pressure for him to make a deal.

Honing in on the increases, a snapshot shows that hotels, and restaurants came in at 45,000; but taking an aerial view, there is a decrease with 205,000 new jobs, from the 2018 average of 223,000.

“In the near term, it’s easier for employers to invest in hiring workers than it may be to, say, build a new factory during a protracted trade war, said Mark Hamrick, senior economic analyst at Bankrate.com,” told The Washington Post, giving us pause for rejoicing.

“If you’re going to build a structure, that’s a substantial commitment,” Hamrick added. “The good news for employers, and the bad news for workers, is that most employees have virtually no job security, so that does provide employers a bit more flexibility.”

Job and wage insecurity may be the new normal, and as noted in our previous posts, “Economists are puzzled about the cause. Some believe that falling union membership and the lack of bargaining power by employees has made it harder for people to demand a raise. Others point to workers seeking better benefits in exchange for higher wages, or low levels of inflation that have made it easier to keep wages low.”

“It doesn’t make sense. We would expect in a tightening labor market to see stronger wage growth,” said Heidi Shierholz, senior economist and director of policy at the left-leaning Economic Policy Institute. “Instead, wage growth has been backsliding this year.”

Updated Dec. 10, 2019, at 4:20 p.m. CST