Abacus: What January Revealed – Wages, Jobs And Good Unemployment
While many may have begun this month optimistic about their Valentines celebrations or Marvel’s Black Panther movie, some looked eagerly to the release of the Bureau of Labor Statistics’ (BLS) latest report on U.S. employment data.
Even with the increase in population and the subsequent increase in the number of unemployed, up now around 6.7 million from 6.6 million, the unemployment rate holds steady at 4.1 percent for the fourth month in a row – the lowest since December 2000.
The amount of people employed rose to 152.43 million last month, a small increase (0.27 percent) from the 154.02 million employed in December. Meanwhile, the number of people not in the labor force has increased by 153,000, but this has remained relatively the same as last year with only a 1.4 percent difference. Similarly, the total U.S. participation rate and employment-population ratio have both remained relatively unchanged for the past four months, at 62.7 percent and about 60.1, respectively.
After maintaining an increase each month of 0.7 percent on average, the amount of people who reported wanting a job experienced its first decrease in three months as it dropped by 137,000 (2.6 percent). Notice how this timeline matches that of the constant low unemployment we’ve had recently. It’s also important to note that the amount wanting a job is lower than it was a year ago, (9.6 percent lower), even though the unemployment rate then (4.8 percent) was higher than it is now. Additionally, the increase in the amount unemployed (1.6 percent) is greater than the increase in the amount employed, which we saw was less than one percent. What this suggests is that of those 137,000, most went back to actively looking for work recently with less landing jobs.
Among this data of persons actively looking for a job are those marginally attached to the labor force, which are people who have been looking for work the past twelve months but stopped momentarily (past four weeks). Keeping in mind that the data for these categories are not seasonally adjusted, there was a total of 1.7 million people marginally attached to the labor force in January – 5.7 percent lower than last year. A further subset of this is discouraged workers – those that have completely stopped looking for work for various reasons they feel barred them from employment – whose numbers have also decreased (by 15.2 percent) since last year, down to 451,000 as of January. Just like the changes to the amount of people wanting a job, these results can also be a representation of positive influence from the low unemployment rate.
The unemployment rate for women over 20 has changed very little, staying close to 3.6 percent for the past three months. Men over 20, however, have seen a steady increase in employment in the past four months despite their unemployment rising to 3.9 percent which is only a tenth of a percent higher than its previous rate. For men of this age range, employment rose to 79.7 million – 10 million more than their female counterparts. Admittedly, this gap may be due to their larger participation rate, (71.7 percent), which is 13.6 percent higher than their female counterparts. This would also explain why there are more men over 20 in the labor force despite the women having 8.6 million more in their population – 124.34 million as of January.
Taking a closer look at millennials who have been in the workforce longer, part of those 25 and over, the BLS report shows that people with a bachelor’s degree or higher have experienced an unmoving unemployment rate of 2.1 percent for the past three months. However, their employment-population ratio, now at 71.8, has been slightly decreasing at an average of 0.2 for the past four months. This is due to the consistent 0.1 decrease in the participation rate, currently at 73.4 percent, which offsets the steady rise in the millennial population. This means that as the population is growing, less of them are participating.
As mentioned before, however, the unchanged unemployment rate is a positive sign for this demographic as they’re doing better than last year’s 2.5 percent unemployment. There’s now 54.72 million millennials ages 25 and over employed, which is 0.12 percent higher than it was in December. Although this growth is only about a fifth of the previous month’s increase, it’s still 3.2 percent larger than the number employed last year for the same demographic (53 million).
There were 200,000 jobs on nonfarm payrolls added to the labor market in January. This is greater than the 177,000 estimated by economists in a Wall Street Journal survey of January’s employment data. It’s also lower than the reported increase of 234,000 jobs by Automatic Data Processing Inc. (ADP) and Moody’s Analytics.
Although, the respective payroll processor and forecasting firm does not have as big a reach in their research samples as the BLS does. Thus, they may not have accounted for some losses outside their pool of data. Based on preliminary data from the BLS report, food services and drinking places join the trend of employment gains alongside health care, manufacturing, and construction.
Education and health services were in the lead of employment changes with 38,000 jobs added to the industry. Over half these were in health care, with the jobs split 60/40 between hospitals and ambulatory services. Following this is an employment increase in construction – 36,000 to be exact. About 75 percent of this comes from the increase in specialty trade contractors, with it split between residential and nonresidential contractors alike.
Next is the leisure and hospitality industry which saw an additional 35,000 jobs in the industry. Almost 90 percent of this comes from jobs at food services and drinking places, as they’re responsible for adding 31,100 jobs to the sector. The manufacturing industry continues this trend of employment gains, followed closely by professional and business services in the data for 3-month net changes. The resulting 15,000 jobs in manufacturing is made from the difference between the 18,000 durable goods jobs added to the industry and the 3,000 nondurable goods jobs it lost. However, this loss is hardly as considerable as other sectors that haven’t seen any gains in employment for a while. The utilities and information industries continued their trend of employment losses in the month of January at 1,400 and 6,000, respectively.
Focusing on earnings now, the production and nonsupervisory employees who make up four-fifths of the private nonfarm employment now earn $22.34 in average hourly earnings, which is $0.53 greater than last year’s average. Although average weekly earnings went down in January by $1.23, they also experienced an overall increase from last year by 2.4 percent, which parallels the average hourly earnings’ increase. This is represented as a $17.80-increase in average weekly earnings since January 2017 when it was at $732.82.
Despite the commentary on inflation limiting its real impact, wage growth in January is starting to pick up with economic predictions for the current unemployment rate. With a relatively tight labor market, employers are expected to increase their wages to either entice new workers or encourage employees to stay.