U.S. job market was very strong in 2017
December was the 87th consecutive month of U.S. job growth, an unparalleled stretch of good news for workers.
The Labor Department said Friday that 148,000 jobs were added, bringing the average over three months to 204,000. The unemployment rate was 4.1 percent, the same as in November. And average hourly earnings grew by 9 cents, to $26.63, bringing the increase from 2016 to 2.5 percent.
The monthly jobs gain is below what the economy added for most of the year, but “it’s still way ahead of what the economy needs to keep up with the new, slow rate of working-age population growth,” said Jed Kolko, the chief economist for Indeed, a job-search site.
The number of people entering the labor force increased only slightly over the month, continuing the trend of participation rates that have not budged since 2015. That’s partly the effect of Baby Boomers heading into retirement, and the fact that the rate hasn’t gone down is a sign of the labor market’s continued appetite for new workers.
But it may also suggest that
there are still people who haven’t come back into the workforce following the recession or that they’ve tried but have been unsuccessful.
“What’s curious is why employers who are screaming that they can’t find people to hire aren’t pulling those people back in,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics.
“2017 was a very strong year for the labor market,” Kolko said.
At the same time, job growth for the year was slightly less robust than in 2016, under President Barack Obama. And most economists think presidents do not generally determine the course of the economy, although that has not stopped President Trump from taking credit.
The president pointed in a tweet Wednesday to the 4.1 percent unemployment rate as evidence that the economy is “only getting better!” When he took office last January, the rate was 4.8 percent.
It is too early to measure the hiring effects of the corporate tax cut passed last month, but Trump’s agenda may be having a positive impact on the economy in other ways.
His push to dismantle regulations on businesses seems to have emboldened corporations to start pouring more money into machines and plants, which is the kind of spending that drives broad growth.
Perhaps the most closely watched number in the report was the change in wages from the previous December. Earnings increased by around 2.5 percent from 2016.
Workers in financial services and the leisure and hospitality sectors saw the biggest increases over the year, with wages in both industries ticking up by around 3.6 percent.
“We don’t see our clients being willing to commit to wage increases on a permanent basis,” said Bill Ravenscroft, a senior vice president at Adecco Staffing USA.
The agency employs around 60,000 workers, hiring more during the holiday season, and places many in distribution centers and warehouses often used by e-commerce giants.
Those companies have increased pay for workers in hot warehouse markets, such as Memphis or the Inland Empire in Southern California, where they are competing with many other companies crowded into the same area, Ravenscroft said.
But instead of increasing salaries across the board, employers are vying for pickers, packers and shippers by offering new perks. Logistics companies have begun providing on-site child care, or reimbursing employees who need to put their children in day care while they work.
Some companies are entering workers in raffles every week to win laptops, televisions and tablets or are bringing food trucks to their warehouses and paying for employees’ lunches.
“These types of benefits in the past, you associated them with Silicon Valley, startup companies, they weren’t synonymous with your traditional employers,” Ravenscroft said. “We aren’t seeing them saying we are going to take a long-term, universal approach to raising wages.”
There are signs beneath the surface, though, that more widespread wage growth may be around the corner. In areas where unemployment has dipped below the national rate, pay has begun to accelerate.
Cities where joblessness is 3.5 percent or lower have also witnessed an impressive 4 percent annual increase in earnings, Shepherdson said.
Over the last few months, the industries that have been performing particularly well have been construction and manufacturing — middle-wage, middleskill sectors that had been lagging. Following a disappointing 2016, manufacturing added 196,000 jobs last year. Construction payrolls increased by 210,000. Mining employers also posted solid gains throughout 2017, bucking a trend of job losses in recent years.
Manual-labor positions are the kinds of jobs that Trump has promised to bring back in droves, so the increase could be politically important.
The rest of the world is also in the midst of a strong recovery, helping to drive a U.S. rise in productive blue-collar work.
“The manufacturing upturn story is a global story,” Shepherdson said. “It’s happening everywhere. You can’t take credit for the recovery in Europe and China.”
Retail, on the other hand, finished the year in a slump. The industry — a huge employer across the country — has been struggling to contend with the rise of e-commerce and had a bad month in December, despite the rush of holiday shopping. The sector slashed 67,000 jobs over the year.