Gov’t reports 145,000 new jobs created last month. If typical, nearly half of them pay low wages

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Bloomberg Markets and Finance / YouTube U S Economy Grew at 1 1578673912.jpg...
Bloomberg Markets and Finance / YouTube

The Bureau of Labor Statistics reported Friday that the U.S. economy created 145,000 seasonally adjusted nonfarm jobs in December. Of those, 139,000 were created in the private sector, 6,000 in government jobs at all levels. It was the 111th consecutive month of job growth. With each monthly report, the bureau always revises its tally for the previous two months to account for data unavailable when those counts were originally made. This time, October was revised from 156,000 to 152,000, and November from 266,000 to 256,000.

The bureau has set up several categories to measure the unemployment rate. One of those—U3—covers what most of the headlines report each month: jobless people who actively looked for work sometime in the last four weeks but couldn’t find any. For December, that rate was 3.5%, continuing a half-century low. Among the other categories is U6, which covers both unemployment and underemployment and is considered a better overall measure of the job situation by many economists. It hit 6.7% in December. 

A low level of unemployment is a good thing. At the very least, it reduces some suffering. So the fact that the past three years have seen a continuation of what began under President Barack Obama as a difficult climb out of a deep hole isn’t anything to be unhappy about just because Donald Trump now occupies the White House. But the situation is a lot more nuanced than can be revealed about the well-being of the labor force by a tally of who worked at least one hour during the survey period. For example, there is the bad news happening in manufacturing. In 2019, manufacturing only generated a gain of 46,000 jobs compared with a 264,000 gain in 2018. And it appears more bad news is on the way. But we’ll take that up in a separate story.

A key nuance is: How many of those millions of workers are earning decent money in those now-plentiful jobs, part-time or full-time? 

The bureau reported that average wages for all workers rose in December by 3 cents an hour, and wages for production and nonsupervisory workers rose by 2 cents an hour. Last month, it reported that from November 2018 to November 2019, real (that is, inflation-adjusted) average hourly wages had increased 1.7%. This was combined with a decrease in the average workweek, which meant real average weekly earnings over this period fell 0.6%, resulting in a 1.1% increase in real average weekly earnings year over year. Weak by any measure. Especially in an economy we are told nearly every day is booming. Moreover, average wages skew reality, since higher earners lift the average and make prosperity seem broader than it actually is.

A Brookings Institution report released in November noted in its analysis that 53 million Americans between the ages of 18 and 64 qualify as “low-wage.” That is 44% of all workers. Their median hourly wage? $10.22. Median annual earnings? About $18,000. Well above the $7.25 federal minimum that hasn’t changed in a decade, and is now worth $6.05, which in no way is a living wage in many parts of the country. One positive factor for low-wage earners is that their wages are rising faster than the average for all workers. (Note that the linked article is talking about nominal, not inflation-adjusted, wages.)

Time for one more nuance?

The BLS reported, “In the motor vehicles and parts manufacturing industry, relatively small gains in workers’ hourly earnings from 1990 to 2018 did not keep pace with inflation. As a result, real (that is, inflation-adjusted) average hourly earnings declined in motor vehicles and parts manufacturing over the 1990–2018 period. In contrast, inflation-adjusted hourly earnings in the total private sector increased over this period.”

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Such nuances just scratch the surface. They reflect some of the chronic problems of the economy that started decades before the folks who brought us the Great Recession caused so much wreckage. With the acute problems of that recession now past—though not everyone has yet recovered from its impacts—we need to remember that the chronic problems don’t go away in boom times unless policies are adjusted to make that happen. Big political obstacles stand in the path of such changes. Some people get real twitchy when the conversation turns to doing something effective about economic inequality.

Here are more data from the December jobs report:

For all of 2019, payroll employment grew by 2.1 million, or an average of 176,000 a month. That’s the slowest level of new job creation in nine years and well below the 2.7 million positions added in 2018.

The civilian workforce rose by 209,000 after rising by 40,000 in November and 325,000 in October.

The labor force participation rate remained the same at 63.2% in December. The employment-population ratio remained the same at 61.0% for the fourth straight month in December.

Unemployment rates differ by race and sex. (December percentages in bold; November percentages in [brackets and italics].) Adult men: 3.1% [3.2%]; Adult women: 3.2% [3.2%]; Whites: 3.2% [3.2%] ; Blacks: 5.9% [5.5%]; Asians:  2.5% [2.6%]; Hispanics: 4.2% [4.2%]; American Indians: Not counted monthly.

Hours & Wages:

 Average hourly earnings of private-sector production and nonsupervisory employees rose in December by 2 cents an hour to $23.79

 Average hourly earnings for all employees on private nonfarm payrolls in December rose 3 cents an hour to $28.32
 Average work week for all employees on nonfarm payrolls remained unchanged at 34.3 hours in December.

 The manufacturing work week in December remained the same at 40.5 hours.

December job gains and losses for selected categories:

  • Education and health services: 36,000
    ° Health care & social assistance: 33,900
  • Professional and business services: 10,000
  • Manufacturing: -12,000
  • Temporary help services: 6,400
  • Transportation & warehousing: -10,400
  • Financial activities: 6,000
  • Leisure & hospitality: 40,000
  • Information: 3,000
  • Retail trade: 41,200
  • Construction: 20,000
  • Mining and Logging: -9,000
  • Government at all levels: 6,000

Here’s what the seasonally adjusted job growth numbers have looked like in the previous decade compared with this December’s gain of 145,000 jobs:

December 2009: -269,000
December 2010:    74,000
December 2011:  204,000
December 2012:  237,000
December 2013:    67,000
December 2014:  269,000
December ​2015:  280,000
December 2016:  215,000
December 2017:  174,000
December 2018:  227,000

The bureau uses the Current Employment Survey of 142,000 business establishments at 689,000 individual worksites in its count of how many jobs are created each month and derives the unemployment rate from the Current Population Survey of 60,000 households. Since the final day of each survey falls around the 12th of each month, this month’s data actually measures jobs gained in the first part of December and last part of November.

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2 Comments on "Gov’t reports 145,000 new jobs created last month. If typical, nearly half of them pay low wages"

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Gunther
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Gunther

Mostly part-time, low wage jobs.

Tessa
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Tessa

I would guess that a large majority of these people that did get hired either full time or part time, that they have no place to call home, everyone deserves some type of proper housing ~