Commentary Magazine

The Jobs Report

The American economy added 252,000 jobs in December, slightly above economists’ estimate of 242,000 jobs. The number of jobs created in October was revised upward to 261,000 from 242,000, while the November jobs number was revised upward to 353,000 from 321,000. Meanwhile the unemployment number dropped two notches to 5.6 percent from 5.8. That’s the lowest unemployment figure since June 2008, just as the recession was gathering steam and three months before the financial crisis hit.

Manufacturing jobs, mostly in durable goods, added 17,000 jobs in December. For 2014, manufacturing job growth averaged 16,000 a month, as compared to 2013 when the economy added an average of 7,000 jobs a month. American manufacturing, for various reasons, such as lower fuel costs, is on an upswing.

This is all good news. But it is not unalloyed by any means. In December, average hourly wages for private, non-farm payrolls decreased by five cents to $24.57. In all of 2014, wages grew by only a dismal 1.7 percent. And while unemployment decreased by two-tenths of a percent, the number of long-term unemployed was nearly unchanged at 2.8 million, accounting for 31.9 percent of total unemployment. Ditto for those working part-time because they can’t find full-time employment (6.8 percent). And 2.3 million are “marginally attached to the labor force.” They want work, but have not looked for a job in the last four weeks, because they do not think jobs are out there.

Additionally, the unemployment rate went down two-tenths of a percent partially because the participation rate went down two-tenths of a percent as well. Had the participation rate in December been as high was it was in June 2008, (66.1 percent), total unemployment would be much higher today.

Counterintuitively, a sign that the economy is, finally, in full recovery mode, will be when the number of jobs being created continues to go up, but so does the unemployment rate. That will be because the participation rate is going up, not down. That means that people are moving back into the labor force because they think that jobs are out there for them to find.

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