FacebookTwitterRedditEmail

Jobs Before COVID-19: Strong Employment Numbers, Weak Wage Growth

Wage growth slowed further in February to just 3.0 percent over the last year.

The Bureau of Labor Statistics reported that the economy added 273,000 jobs in February. The January figure was revised up to the same number, which, along with an upward revision to December’s number, brought the three-month average to a very strong 243,000 jobs.

The unemployment rate edged back down to 3.5 percent, reversing the January rise. However, the employment-to-population ratio (EPOP) also edged down 0.1 percentage points from the recovery high reached in January. The EPOP for prime-age workers (ages 25 to 54) also edged down by 0.1 percentage points to 80.5 percent, but it is still 0.6 percentage points above its year-ago level.

In spite of the strong job growth, wage growth continues to weaken. Over the last year, the average hourly wage has risen by just 3.0 percent. The annualized rate for the last three months (December, January, February) compared with the prior three months (September, October, November) was 2.8 percent, suggesting further slowing.

A factor supporting the view that the labor market is weaker than suggested by the unemployment rate is the drop in the share of unemployment due to voluntary quits to 13.4 percent. The year-round average in 2000 was 13.7 percent, with a peak of 15.2 percent.

Other data in the household survey were mixed. There were few major changes in unemployment or employment rates for major demographic groups; although the EPOP for Hispanics rose 0.2 percentage points to 65.1 percent, a new high for the recovery. The duration measures of unemployment all fell slightly.

On the other side, the number of people involuntarily working part-time increased by 136,000 to 4,318,000. This is now slightly above its year-ago level. There was also a modest rise in voluntary part-time employment to 22,175,000.

The share of voluntary part-time employment in total employment had been on a downward path until the Affordable Care Act took full effect in 2014, as people had improved access to health care outside of employment. This was most important for young mothers who opted to work part-time to spend more time with their kids. However, the share seems to be headed downward again in the last two years.

The employment gains in the establishment survey were broadly spread across sectors. Construction had another strong month, adding 42,000 in February after adding 49,000 in January. This was likely in part attributable to unusually warm winter weather in the Northeast and Midwest. Manufacturing added 15,000 jobs, after shedding 20,000 in January. Employment in the sector is up by 31,000 from its year-ago level.

Coal mining was a job loser in February, shedding 500 jobs, which is just under 1.0 percent of employment in the sector. The current number of 50,600 is 300 fewer than when Trump took office.

Health care added 31,600 jobs, close to its average of 30,600 over the last year. There was a big jump of 52,600 in restaurant employment, well above the average of 25,300 over the last year. This is another piece of evidence suggesting weakness in the labor market. In a tight labor market, this low-paying sector should be having trouble finding workers.

The government sector was a big contributor to job growth, adding 45,000 in February after a gain of 51,000 in January. This compares to an average of just 21,800 over the last year.

Professional and technical services added 32,300 jobs in February, somewhat above its average of 23,800 over the last year. Retail lost 7,000 jobs in February, bringing its loss over the last year to 7,800.

While this report can be seen on the whole as positive, given the strong job growth and the sharp upward revisions to the prior two months’ numbers, there is also clear evidence that the labor market is not as tight as it could be. The slowing of wage growth is the most important factor, but the relatively low share of unemployment due to voluntary quits, along with the sharp growth in restaurant employment suggest workers do not have their choice of jobs.

This report is sort of a calm-before-the-storm, since there was no coronavirus effect at the time of the survey in mid-February. On the plus side, this should give the Fed and Congress confidence that they can move forward with stimulatory measures without any fear of overheating the labor market.

This article first appeared on Dean Baker’s Beat the Press blog.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

Weekend Edition
August 07, 2020
Friday - Sunday
John Davis
The COVID Interregnum
Louis Yako
20 Postcard Notes From Iraq: With Love in the Age of COVID-19
Patrick Cockburn
War and Pandemic Journalism: the Truth Can Disappear Fast
Eve Ottenberg
Fixing the COVID Numbers
Jeffrey St. Clair
Roaming Charges: Every Which Way to Lose
Paul Street
Trump is Not Conceding: This is Happening Here
Robert Hunziker
The World on Fire
Rob Urie
Neoliberal Centrists and the American Left
John Laforge
USAF Vet Could Face ‘20 Days for 20 Bombs’ for Protest Against US H-Bombs Stationed in Germany
Andrew Levine
Clyburn’s Complaint
Kavaljit Singh
Revisiting the Idea of Pigou Wealth Tax in the Time of Covid-19
Paul Ryder
Here Come the 1968 Mistakes Again
T.J. Coles
Fighting Over Kashmir Could Blow Up the Planet
David Macaray
Haven’t We All Known Guys Who Were Exactly like Donald Trump?
Conn Hallinan
What’s Driving the Simmering Conflict Between India and China
Joseph Natoli
American Failures: August, 2020
Ramzy Baroud
Apartheid or One State: Has Jordan Broken a Political Taboo?
Bruce Hobson
The US Left Needs Humility to Understand Mexican Politics
David Rosen
Easy Targets: Trump’s Attacks on Transgendered People
Ben Debney
The Neoliberal Virus
Evelyn Leopold
Is Netanyahu Serious About Annexing Jordan Valley?
Nicky Reid
When the Chickens Came Home to Roost In Portlandistan
Irma A. Velásquez Nimatuj
The Power of the White Man and His Symbols is Being De-Mystified
Kathy Kelly
Reversal: Boeing’s Flow of Blood
Brian Kelly
Ireland and Slavery: Framing Irish Complicity in the Slave Trade
Ariela Ruiz Caro
South American Nations Adopt Different COVID-19 Stategies, With Different Results
Ron Jacobs
Exorcism at Boston’s Old West Church, All Hallows Eve 1971
J.P. Linstroth
Bolsonaro’s Continuous Follies
Thomas Klikauer – Nadine Campbell
Right-Wing Populism and the End of Democracy
Dean Baker
Trump’s Real Record on Unemployment in Two Graphs
Michael Welton
Listening, Conflict and Citizenship
Nick Pemberton
Donald Trump Is The Only One Who Should Be Going To School This Fall
John Feffer
America’s Multiple Infections
Kollibri terre Sonnenblume
Thinking Outside the Social Media Echo Chamber
Andrea Mazzarino
The Military is Sick
John Kendall Hawkins
How the Middle Half Lives
Graham Peebles
The Plight of Refugees and Migrant Workers under Covid
Robert P. Alvarez
The Next Coronavirus Bill Must Protect the 2020 Election
Greg Macdougall
Ottawa Bluesfest at Zibi: Development at Sacred Site Poses Questions of Responsibility
CounterPunch News Service
Tensions Escalate as Logging Work Commences Near Active Treesits in a Redwood Rainforest
Louis Proyect
The Low Magic of Charles Bukowski
Gloria Oladipo
Rural America Deserves a Real COVID-19 Response
Binoy Kampmark
Crossing the Creepy Line: Google, Deception and the ACCC
Marc Norton
Giants and Warriors Give Their Workers the Boot
David Yearsley
Celebration of Change
FacebookTwitterRedditEmail