Bored and stable the way to go
WHATEVER is really happening in the economy — are property prices plunging? are retail stores closing and chain after chain like Roger David collapsing? — one thing is clear and unambiguous.
This is that we have been creating more and more jobs — nearly 300,000 over the past year, over 800,000 over the past three years.
Interestingly and attractively, there’ve actually been more for women — over the three years, around 440,000 — than for men, at a little under 400,000.
Further, they’ve seemed to me a very positive mix of both part-time and yet more — what’s generally seen as “real” — full-time ones. Over the three years it’s been about 500,000 full-time jobs and 300,000 part-time.
The full-time split has skewed more to males. But even with females, it’s broken slightly more than 50 per cent full-time.
Granularly, again to me, this seems a mix that suits both workers and employers, in the sort of economy we now have. The overall number that was significant was that the — raw — jobless rate broke below 5 per cent, to 4.9 per cent, for the first time since the GFC. It did so by “gapping down” from 5.3 per cent the previous month; and it did so for both men (4.8 per cent) and for women (4.9 per cent).
Now, the number that got the headlines was actually 5 per cent unemployment. I’m using the raw or “original” numbers. The 5 per cent refers to the “seasonally adjusted”.
But either way the story was exactly the same: a lot of jobs being created and unemployment coming right down to what has to be close to “full employment” if not quite boomtime levels. There are two other parts of “the story” that are important.
First, all of this is history. It’s what happened in the year to September and in the three years to September.
Although there would have been some “momentum” to carry on into at least through October and indeed probably through Christmas, yesterday’s jobs performance doesn’t deliver any guarantees for 2019. This is es- pecially in the context of that second big factor. Clearly, workers have “paid for’’ those jobs with very modest wage rises.
I’d argue that it’s been a very positive feedback loop. Modest wage rises have priced jobseekers into jobs; and in turn the jobs have been “available” because of the increased spending of more and more people in jobs.
Now the Reserve Bank’s been “unhappy”’ about the low wage increases: it wants stronger wages growth to feed higher inflation to enable it — to force it — to start raising interest rates.
But you especially should be careful about getting what the RBA (and you) want. If wages start to accelerate, it would certainly upset this balance, which I suggest has produced a pretty good all-round outcome.
Do we as Australia really want to go back to a situation where people with jobs get stronger wage rises but people without them have less chance of getting a job?
To say nothing of what a wage rise would do to household budgets, when it ended up forcing interest rates higher?
What you picked up in a relatively small extra wage rise could be well and truly eaten up in higher payments on your home loan? And what if you didn’t keep your job? The last two to three years might have been boring but they’ve been predictable and — for most — relatively comfortable. Do we really want the “excitement” of rising interest rates and rising wages — and probably fewer secure jobs?
Do we really want that “excitement” precisely when the world is also likely to be turning “exciting”? With US interest rates going up, global sharemarkets probably going down if not plunging, and our two most important economic and financial partners — the US and China — locked in a trade war. Then throw in all the other uncertainties and volatilities of the globalised online world we now live in, which are the major dynamics in the fall of retailers like Roger David.
A bit of boredom and stability goes a long way. I for one would be very happy if we get to this time next year and the RBA has left its interest rate unchanged for the third year in a row and wage rises — and inflation — have been modest.
I would then be ecstatic if in addition we’d had another 300,000 jobs created, spread between part and fulltime and shared about equally between men and women.
I gotta add, though, I won’t be holding my breath.