U.S. employers added 250,000 jobs and unemployment remained low at 3.7 percent in October—but wage growth is the best news for workers, with pay growth topping 3 percent year over year for the first time since the Great Recession.
Hourly wages climbed 3.1 percent from a year ago, while weekly pay increased by 3.4 percent, according to the Bureau of Labor Statistics.
“After years of slow wage growth hovering near 2 to 2.5 percent, today’s jobs report is a landmark in the long recovery since the Great Recession, showing the power of a tight labor market to raise pay for U.S. workers if [it’s] allowed to run hot for a sufficiently long time,” said Andrew Chamberlain, chief economist at Glassdoor. “We’ve seen steadily building wage pressure this year, with annual pay gains topping 3 to 4 percent in tech-heavy metros such as San Francisco and New York City.”
Josh Wright, chief economist for recruitment software firm iCIMS, based in Holmdel, N.J., pointed out that October’s wage gain “was a bit inflated by the hurricane-suppressed October 2017 number, but earnings still rose 0.2 percent on the month, and that’s not bad. While the 3.1 percent gain in average hourly earnings [compared to 2017] does not represent a break-out acceleration in wage growth, it confirmed the ongoing gradual upward march of wages.”
While workers welcome the news of higher pay, employers, especially small businesses, are challenged by the trend, said Julia Pollak, labor economist at online employment marketplace ZipRecruiter. “Small businesses tend to have smaller profit margins and less ability to afford higher hiring costs.”
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Jobs Expansion Continues
The number of jobs grew by 1.7 percent over the past year, with employment rising across nearly all industries. “Despite a significant shortage in skilled talent, the labor market continues to grow,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute in Roseland, N.J.
ADP reported an increase of 227,000 private-sector jobs in October. “We continue to see larger employers benefit in this environment as they are more apt to provide the competitive wages and strong benefits employees desire,” she said.
“It is astonishing at this point in the recovery that we have had four months this year of job growth at or above 250,000,” said Martha Gimbel, research director for Indeed’s Hiring Lab, the labor market research arm of the global job search engine.
The sectors showing the strongest jobs gains in October include:
- Leisure and hospitality (42,000 jobs). “The rebound in the weather-sensitive leisure and hospitality sector was a strong reaffirmation that weather was the story for September,” Wright said, referring to the sector’s job losses in the wake of Hurricane Florence.
- Health care (36,000).
- Professional and business services (35,000).
- Manufacturing (32,000). “There are still no signs that trade tensions are having a significant impact on manufacturing employment, although this remains an area to watch,” Wright said.
- Construction (30,000).
- Transportation and warehousing (25,000).
“After a large loss in retail employment in September, even retail experienced a small gain in October, [2,400 jobs] which suggests that growth at other retailers has been strong enough to offset the effect of layoffs at Sears,” Pollak said.
Unemployment Falls by Nearly 450,000 in 2018
The U.S. unemployment rate is at its lowest level since 1969. New unemployment claims have fallen under 220,000 since July, a number that reflects the most robust labor market at least since the late 1990s.
There are still over 6 million people considered unemployed, with nearly a quarter of them considered long-term unemployed (jobless for 27 weeks or longer.)
The jobs market prompted 711,000 people to enter the labor force in October, pushing up the nation’s labor force participation rate by 0.2 percentage points to 62.9 percent. “That’s a sign that rising pay and booming job growth is pulling in some marginally attached workers, further tightening a labor market already at full employment,” Chamberlain said.
Wright added that involuntary part-time work, underemployment and long-term unemployment all fell. “Indicators of employers responding to the tight labor market by digging deeper for talent were mixed, however—unemployment continued to fall faster among teens [11.9 percent], but it rebounded more for those without college degrees than other categories of educational attainment.”
The report also showed that more workers are transitioning from part-time to full-time work.
“While this means job seekers see increased incomes and greater financial security, studies show businesses also benefit from improved retention, performance and human capital investments,” Pollak said. “At ZipRecruiter, we’re seeing an increasing share of full-time job postings, and increased searches for full-time rather than part-time work.”
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