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Jobs report end of year 2017

January 6, 2018

 

 

Yesterday the U,S. Bureau of Labor Statistics released its monthly jobs report for December. The seasonally adjusted unemployment rate for the United States remained steady at 4.1 percent, no change over the previous two months. The percentage of the working age population counted as being in the labor force remained unchanged at 62.7, and the percentage of the working aged civilian population that was employed was unchanged at 60.1.

 

The report shows labor markets holding steady at just about full employment. Further progress on more jobs and increased economic growth, a promise that Republicans used in passing their recent tax cut, will be very difficult under these circumstances. Jobs and increased growth, at least in the short run, i.e., over the next year or two, will have to come from increases in the size of the labor force, something that can pull into the labor force some of those who are not currently seeking work. Some of those out of the labor force may be in school or college, especially the younger of these, and it may be better for them to be in school for them and for the country, rather than in the labor force, though part time jobs for those in school can be good (labor force statistics are based on the civilian population aged 16 years old or older).

 

Those 65 or older may be retired. Others who are out of the labor force may be at home as care takers for elderly or sick, some may be taking care of infants and pre-school children and some may simply have become discouraged from seeking work and not finding it, and have given up looking. Some may be struggling with substance abuse or other issues that have interfered with landing a job (to be counted in the labor force one must have taken a specific step to look for a job in the four weeks before the monthly survey week that is used to estimate the number of employed and unemployed).

 

In December 2017 there were an estimated 474 thousand, on a seasonally adjusted bases, who were identified as not in the labor force because they were discouraged about finding work, and another million or so who were not in the labor force for reasons other than being discouraged. The best chance of getting an increase in the size of the labor force is among these groups. But it won't be easy. It may take some changes in policy, like expanded subsidized child care for those with young children, and elder care for those with aging parents, and it may take expanded policies to treat substance abusers.

 

An easier way to increase the size of the labor force is via increased immigration, but that is opposite to the current trends which are for increased tightening of immigration.

 

That we are at or very near a full employment economy is good news. While the prospect of any further spurt in job creation is not strong, what can be hoped for is that wages will finally begin to rise as employers compete to hold on to workers they already have. In 2017 average hourly wages for private sector non farm production and non-supervisory workers increased by 2.3 percent, just about the same as the percentage rise in consumer prices. So wages have kept up with the mild inflation we are experiencing, but what we should be looking for are wage increases that outstrip inflation so workers can really feel they are getting ahead, and it is not just the corporate executives and those with significant stock holdings that are doing so.

 

References:

Bureau of Labor Statistics, table on employment, unemployment and size of the labor force released in January 2018

https://www.bls.gov/news.release/empsit.a.htm

BLS table on wages released January 2018

https://www.bls.gov/news.release/empsit.t24.htm

BLS table on prices released December 2017

https://www.bls.gov/news.release/cpi.t01.htm

BLS tables on those out of the labor force

https://data.bls.gov/pdq/SurveyOutputServlet

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