November Employment Report
The latest from the BLS can be found here:
Nonfarm payroll employment rose by 132,000 in November, and the unemployment rate was essentially unchanged at 4.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job gains continued in several service-providing industries, including professional and business services, food services, and health care. Employment declined in construction and manufacturing.
In other words, some sectors suffered job losses but overall employment rose by a decent amount. The reported unemployment rate, which had declined from 4.6% in September to 4.4% in October inched back up to 4.5%. This increase was not due to fall in the employment to population ratio, which stayed at 63.3% as the Household Survey recorded an increase of 277,000 (can’t wait for Lawrence Kudlow to tell us about all of those self-employed folks). It seems the civilian labor force rose by 383,000 so the labor force participation rate rose from 66.2% to 66.3%.
On the wage front, nominal wages rose from $16.91 to $16.94 last month. Whether this modest increase will keep pace with the rise in consumer prices is not clear as the BLS will release the CPI later. Speaking of which Jeremy Peters and David Leonhardt write:
After four years in which pay failed to keep pace with price increases, wages for most American workers have begun rising significantly faster than inflation … After years of stagnant, even declining real wages for the typical worker, the recent jump has also delivered a rare bit of good news for a White House coping with an unpopular war and the aftermath of the Democratic victory in the midterm elections … That question will begin to be answered today when the Labor Department releases its monthly employment report. Forecasters expect the pay gains — which began in earnest in September, when gas prices sank — to extend into November. But the economy has slowed significantly in recent months, and some analysts predict the housing slump will cause a further slowdown next year that will be a drag on incomes. “The biggest issue is which direction the macroeconomy is headed,” said Jason Furman
So far, Jeremy and David have written a good article. So what got Kevin Drum up on the wrong side of the bed so early on the West Coast:
Boy, I sure hope the Fed doesn’t do anything to put the kibosh on this. Workers could use a break. But I’m sure Ben Bernanke realizes….um, realizes that — what? He said what? … Ah yes. “Labor costs.” We can’t have those rising, can we? Not only does it get the workers all uppity, but it drains corporate treasuries and puts a crimp in CEO pay increases. That would be a disaster.
If Chairman Ben thinks the labor market is overheated, I respectfully disagree.
Update: Dean Baker objects to portions of the NYT article:
The use of “significantly” in this sentence can be disputed. It is true that real wages have been rising rapidly in the last few months, but this is because of the plunge in gas prices, that was clearly a one-time event (as later acknowledged in the article). The reality is that nominal wages are rising in a neighborhood of 3.9 percent to 4.0 percent, while the underlying rate of inflation is in the range of 2.5 percent to 3.0 percent, translating into real wage growth of between 0.9 percent and 1.5 percent. This is a decent rate of real wage growth, but certainly not extraordinary. Average hourly wages grew at a real annual rate of 1.5 percent from the beginning of 1996 to 2000. From 1964 to 1973 real wage growth averaged more than 1.6 percent. So, the current rate of wage growth is respectable, but not extraordinary, especially following almost 5 years of wage stagnation. These points are noted in the article, but the article also features Ed Lazear, President Bush’s chief economist, saying that “the pay increases are huge, even relative to a period we think of as good.”
Someone in the White House hyping the little morsels of good news? Unheard of! Deano also critiques Chairman Ben’s fear of rising wages.