Bright Spot: Wage Growth Was Highest in 7 Years, Though the Bar is Low
The final Labor Department jobs report under President Barack Obama finds the U.S. economy added a below average 156,000 jobs and unemployment ticked up. Job creation, which missed expectations in December, was not only below average for 2016 but not sufficient to keep up with population growth or new workforce entries.
Unemployment rate ticked up to 4.7%, while labor participation was flat at an abysmal 62.7% and was unchanged over the year. In December, the less-cited but arguably more important employment-population ratio was 59.7%, where it has stood for the third consecutive month. This measure, too, has showed little change on net in 2016.
While employment in manufacturing (+17,000) gained in December, a whopping 15,000 was in the durable goods component, which actually declined the month prior. In other words, it’s likely temporary and inflated from defense spending aircraft and transportation orders.
Further, since reaching a recent peak in January, manufacturing employment has declined by 63,000 in 2016, alone. Job creation over the last eights years of the Obama presidency has been largely part-time, low-wage service sector work.
For instance, in December average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents to $26.00, after falling 2 cents in November. In December, average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.80. That’s the most they’ve increased in 7 years. Over the year, average hourly earnings have risen by only 2.9%.
Still, even job growth in the service sector cooled in December. Employment in food services and drinking places continued to add jobs (+30,000), adding 247,000 jobs in 2016, but it’s fewer than the 359,000 added in 2015.
The number of American workers employed part-time for economic reasons still stood at 5.6 million, largely unchanged. These are people who want full-time employment but work part time because their hours had been cut back or because they were unable to find a full-time job. Another 1.7 million were marginally attached to the labor force, also unchanged from a year ago.
Among those marginally attached, 426,000 were discouraged workers, which is at least down by 237,000 from a year earlier. Discouraged workers are Americans who quit looking for work because they do not believe jobs are available to them. The remaining 1.3 million marginally attached to the labor force said they did not search due to school attendance or family responsibilities.