Tag Archives: employment

Setting the Record Straight: 8 Years of Labor Market Progress under Obama

 

Eight Years of Labor Market Progress and the Employment Situation in December

WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement  on the employment situation in December and reviewing eight years of job growth including the longest streak of total job growth on record, adding 15.8 million jobs.

Summary: The economy added 156,000 jobs in December, extending the longest streak of total job growth on record, with U.S. businesses adding 15.8 million jobs over the recovery.

Employment grew at a solid rate of 156,000 jobs in December as the longest streak of total job growth by far on record continued. Average hourly earnings for private employees increased 2.9 percent in 2016, the fastest twelve-month pace since the financial crisis. U.S. businesses have now added 15.8 million jobs since early 2010 amid the U.S. economy’s strong recovery from its worst crisis since the Great Depression. The unemployment rate—4.7 percent in December—has been cut by more than half since its peak, falling much faster and further than expected, and nearly all measures of labor underutilization have fallen below their pre-recession averages. Real wages have grown faster over the current business cycle than in any since the early 1970s, and in 2015 U.S. households saw the largest increase in real median income on record. Since 2010, the United States has put more people back to work than all other G-7 economies combined. Thanks in part to the forceful response to the crisis and policies throughout the eight years of the Obama Administration to promote robust, shared growth, the U.S. economy is stronger, more resilient, and better positioned for the 21st century than ever before. Even with this remarkable progress, it remains important to build on these efforts to support further job creation and real wage growth in the years ahead.

THIRTEEN KEY POINTS ON LABOR MARKET PROGRESS OVER THE LAST EIGHT YEARS

1. U.S. businesses have now added 15.8 million jobs since private-sector job growth turned positive in early 2010. Today, we learned that private employment rose by 144,000 jobs in December. Total nonfarm employment rose by 156,000 jobs, slightly below the monthly average for 2016 as a whole but substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation. The unemployment rate ticked up to 4.7 percent in December, less than half its peak during the recession, while the labor force participation rate—which has been largely unchanged over the past three years despite downward pressure from demographic trends—increased to 62.7 percent. Average hourly earnings for all private workers increased 2.9 percent over the past year, the fastest twelve-month pace since the end of the recession and above the pace of inflation in 2016.


2. Since job growth turned positive in October 2010, the U.S. economy has added jobs for 75 straight months—the longest streak of job growth on record and more than two years longer than the next-longest streak. Over this period, nonfarm employment growth has averaged a robust 199,000 jobs a month. On a calendar-year basis, the pace of job growth peaked at 251,000 jobs a month in 2014, the best year for job creation since the 1990s. In 2016, job growth remained strong, averaging 180,000 jobs a month. As of December 2016, total nonfarm employment exceeded its pre-recession peak by 6.9 million jobs. All of the net job creation in the current recovery has been in the private sector, as private-sector payroll employment exceeded its pre-recession peak by 7.0 million jobs as of December.

3. The unemployment rate has been cut by more than half since its peak in 2009, falling much faster and further than expected. After peaking at 10.0 percent in October 2009, the unemployment rate fell rapidly over the course of the recovery, and by mid-2015 had recovered fully to its pre-recession average. Since then, it has fallen even further, standing at 4.7 percent at the end of 2016. The rapid decline in the unemployment rate came far more quickly than most economists predicted: as recently as March 2014, private forecasters expected the unemployment rate to remain above 5.0 percent until at least 2020.

4. Real hourly wages have grown faster over the current business cycle than in any cycle since the early 1970s. In recent years, American workers have seen sustained real wage gains, as hourly earnings have grown faster than inflation. The chart below plots the average annual growth of real hourly earnings for private production and nonsupervisory workers—a group comprising about four-fifths of private nonfarm employment—over each business cycle, including both recessions and recoveries. (Economists prefer comparing across entire business cycles, as they generally represent economically comparable periods.) Since the beginning of the current business cycle in December 2007, real wages have grown at a rate of 0.8 percent a year, faster than in any other cycle since 1973.

5. Since the end of 2012, real wages for non-managerial workers have grown nearly 18 times faster than they did from 1980 to 2007. In fact, since the end of 2012, real wages for private production and nonsupervisory workers have grown over 5 percent cumulatively, more than double their 2.1-percent total growth from the business cycle peak in 1980 to the business cycle peak in 2007—a sign of the remarkable progress made by American families in the current recovery after years of slow growth in wages.

6. Robust real wage growth and strong employment growth have translated into rising real incomes for households, with the largest gains going to low- and middle-income families. From 2014 to 2015, real median household income increased by $2,800, or 5.2 percent, the largest annual increase on record. Gains were even larger in the lower half of the income distribution, ranging from an increase of 5.5 percent for households at the 40th percentile to an increase of nearly 8 percent for households at the 10th percentile. While households in the top half of the income distribution also saw increases, their gains were smaller, with an increase of 2.9 percent at the 90thpercentile of household income. Growth in both real wages and employment in 2016 point to continued gains in real incomes for American households.

7. On net, essentially all of the increase in employment over the recovery has been in full-time jobs. As measured by the household survey, U.S. employment reached a trough in December 2009. Since then, full-time employment has increased by 13.7 million. In contrast, part-time employment has increased by just 420,000 over the course of the recovery.

8. Broader measures of labor underutilization have also steadily improved, and all but one are below their pre-recession averages. The headline unemployment rate, the U-3 rate, includes unemployed persons who have looked for work in the last four weeks. Broader measures of labor underutilization each include a progressively larger group of individuals: U-4 counts discouraged workers in addition to the unemployed, U-5 adds in others who are marginally attached to the labor force, and U-6 also includes people working part-time who would prefer a full-time job (“part-time for economic reasons”). Like the headline unemployment rate, all of these measures saw large increases during the recession, with the U-6 rate in particular reaching a record high. However, U-3, U-4, and U-5 all recovered fully to their respective pre-recession averages in the summer of 2015 and have fallen further since. As of December, the U-6 rate was just 0.1 percentage point above its pre-recession average.

9. Real average hourly wages have risen in every major industry over the current business cycle—and in nearly all, the pace of increase has been faster than in the previous cycle. Since the beginning of the current business cycle, real wages for non-managerial workers have grown at an average rate of 0.8 percent a year. However, this average masks considerable variation in real wage growth among workers in different industries. As the chart below shows, workers in all major sectors have seen real increases in their hourly earnings, ranging from average gains of 0.1 percent a year for workers in the transportation and warehousing industry to gains of 1.7 percent a year for workers in the financial activities sector. For nearly all major industries, real wage gains so far in the current business cycle have outpaced gains in the 2000s business cycle.

10. Unemployment rates for all major demographic groups have recovered to below their respective pre-recession averages, though more work remains to close longstanding disparities in the labor market. The unemployment rates for African Americans and Hispanic Americans peaked at 16.8 percent and 13.0 percent, respectively, after experiencing larger percentage-point increases from their pre-recession averages than the overall unemployment rate did. By mid-2015, both the African-American and Hispanic-American unemployment rates had recovered to their respective pre-recession averages. Similarly, the unemployment rates for white Americans and for Asian Americans, which have historically tended to be lower than the overall unemployment rate, have more than recovered to their pre-recession averages. Still, the fact that the unemployment rates for African Americans and Hispanic Americans are much higher than the overall unemployment rate is a reminder that much more work remains to ensure that the benefits of the strong labor market are shared among all Americans, including through efforts like the My Brother’s Keeper initiative.

11. Initial claims for unemployment insurance (UI) have been below 300,000 for 96 consecutive weeks, the longest such streak since 1970. During the Great Recession, claims for unemployment insurance—which are an important leading indicator of recessions—rose sharply to near-record highs. However, they have since declined to well below their pre-recession average, and average weekly initial claims in 2016 were the lowest of any calendar year since 1973. Still, the share of unemployed workers eligible for unemployment insurance has fallen in recent years, in part as a result of reductions in coverage within States’ UI programs. A number of reforms—including several in the President’s Fiscal Year 2017 Budget—would build on the strengths of the UI system to ensure that it both provides effective assistance for those who lose a job through no fault of their own and helps to stabilize the U.S. economy during future downturns.

12. Two-thirds of States have seen their unemployment rates fall below their pre-recession averages. There was extremely wide variation in the effect of the Great Recession on unemployment rates across States and the District of Columbia, with increases ranging from nearly 200 percent (Nevada) to just 13 percent (Alaska) of their respective pre-recession averages. As of November 2016, however, 34 States and the District of Columbia have seen their unemployment rates recover fully, with a number of States seeing unemployment rates substantially below their pre-recession averages. The sixteen States that still have elevated unemployment rates include the six that saw the largest percentage increases in their unemployment rates in the recession.

13. Since 2010, the United States has put more people back to work than all the other G-7 economies combined. The rebound of the U.S. economy from the Great Recession occurred much faster than in most other advanced economies and compares favorably with the historical record of countries recovering from systemic financial crises. As shown in the chart below, the United States has been responsible for a disproportionate share of employment growth in the G-7 economies during the recovery. Although the United States comprises about two-fifths of total employment in the G-7, it has been responsible for more than 55 percent of the net employment growth since 2010, a further sign of the strength and resilience of the U.S. economy and the importance of the policies of the last eight years in putting it on a sounder footing.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.

Economy adds 156,000 Jobs in September; labor force participation rises; wages grow; real incomes rise at fastest pace since 1970s

 

WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the employment situation in September. 

Summary: The economy added 156,000 jobs in September, as labor force participation rose and wages continued to grow.

The economy added 156,000 jobs in September, as the unemployment rate ticked up amid rising labor force participation. U.S. businesses have now added 15.3 million jobs since early 2010, and the longest streak of total job growth on record continued in September. So far in 2016, hourly earnings for private-sector workers have increased at an annual rate of 2.8 percent, much faster than the pace of inflation. In fact, real wages have grown faster over the current business cycle than in any since the early 1970s. Sustained real wage growth in recent years, combined with continued strength in job creation, has led to increased incomes for middle-class families: last month, the Census Bureau reported that real median household income increased 5.2 percent from 2014 to 2015, the fastest annual growth on record. Still, more work remains to sustain faster wage growth and to ensure that the benefits of the recovery are broadly shared, including increasing investment in infrastructure and implementing the high-standards Trans-Pacific Partnership. Additionally, as discussed in a new White House report, Congress should follow the lead of 18 States and the District of Columbia to give millions of American workers a raise by increasing the Federal minimum wage.

FIVE KEY POINTS ON THE LABOR MARKET IN SEPTEMBER 2016

1. U.S. businesses have now added 15.3 million jobs since private-sector job growth turned positive in early 2010. Today, we learned that private employment rose by 167,000 jobs in September. Total nonfarm employment rose by 156,000 jobs, slightly below the monthly average for 2016 so far but substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation. The unemployment rate ticked up to 5.0 percent in September, while the labor force participation rate rose to 62.9 percent, the same rate as in the fourth quarter of 2013 despite downward pressure on participation from demographic trends. The share of the labor force working part-time for economic reasons (those working part-time but who would prefer full-time employment) ticked down in September to 3.7 percent, though it remains above its pre-recession average (3.0 percent).

2. For more than three and a half years, American workers have seen sustained real wage gains, as hourly earnings have grown faster than inflation. So far in 2016, nominal earnings for private-sector workers have increased at an annual rate of 2.8 percent, well above the pace of inflation (1.4 percent as of August, the latest data available). As the chart below shows, nominal wage growth has trended up over the course of the recovery as the labor market continues to strengthen amid robust job growth. At the same time, consumer price inflation fell sharply in 2014 and 2015 due to steep declines in energy prices. While inflation has picked up slightly in recent months as energy price declines have moderated, nominal earnings growth has continued its pickup, translating into continued real wage gains for American workers—a key component of rising standards of living.

3. Real hourly wages have grown faster over the current business cycle than in any cycle since the early 1970s. The chart below plots the average annual growth of real hourly earnings for private production and nonsupervisory workers over each business cycle, including both recessions and recoveries. (Economists prefer comparing across entire business cycles, as they generally represent economically comparable periods.) Since the beginning of the current business cycle in December 2007, real wages have grown at a rate of 0.9 percent a year, faster than in any other cycle since 1973. In fact, since the end of 2012, real wages for non-managerial workers have grown 5.7 percent in total, exceeding the 2.1-percent total real wage growth from the business cycle peak in 1980 to the business cycle peak in 2007—a sign of the remarkable progress made by American families in the current recovery.

4. Rising real wages, combined with continued strong employment growth, have translated into increased incomes for American families, and data from 2016 so far point to continued gains. In September, the Census Bureau reported that real median household income increased by $2,800, or 5.2 percent, the largest annual increase on record. As shown in the chart below, median household income growth tends to track growth in aggregate weekly earnings, the total amount earned by private-sector workers. (Since both income and aggregate earnings reflect the influence of rising employment as well as rising wages, aggregate earnings are conceptually linked more closely to household income than to wages.) The historically large increase in median household income from 2014 to 2015 was far above what would have been predicted based on its historical relationship with aggregate earnings growth, but even aggregate earnings would have predicted strong gains in median income. In 2014 the situation was reversed, with the Census Bureau reporting income gains that fell short of what would have been predicted based on wage data from the Bureau of Labor Statistics. Growth in both real wages and employment so far in 2016 point to continued gains in real income for the typical American household when the data become available from the Census Bureau next year.

5. The distribution of job growth across industries in September diverged somewhat from the pattern over the past year. Above-average gains relative to the past year were seen in wholesale trade (+10,000) and other services (+15,000), while mining and logging (which includes oil extraction) showed no change in September after a number of months of job losses. On the other hand, several industries, including financial activities (+6,000), health care and social assistance (+22,000), State and local government (-15,000), and transportation and warehousing (-9,000) saw weaker-than-average growth. Slow global growth has continued to weigh on the manufacturing sector, which is more export-oriented than other industries and which posted a loss of 13,000 jobs in September.Across the 17 industries shown below, the correlation between the most recent one-month percent change and the average percent change over the last twelve months was 0.28, well below the average correlation over the last three years.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.

 

White House: Economy Adds 151,000 Jobs in August; Unemployment Rate, Labor Force Participation Rate Hold Steady

Jobs 0816

WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the employment situation in August. You can view the statement HERE.

 The economy added 151,000 jobs in August following robust job growth in both June and July as the unemployment rate held steady at 4.9 percent. U.S. businesses have now added 15.1 million jobs since early 2010, and the longest streak of total job growth on record continued in August. So far in 2016, job growth has averaged a solid 182,000 jobs a month, well above the pace of about 80,000 jobs a month needed to maintain a low and stable unemployment rate, and hourly earnings for private-sector workers have increased at an annual rate of 2.8 percent, much faster than the pace of inflation. Nevertheless, more work remains to sustain faster wage growth and to ensure that the benefits of the recovery are broadly shared, including investing in infrastructure, implementing the high-standards Trans-Pacific Partnership, and raising the minimum wage. 

FIVE KEY POINTS ON THE LABOR MARKET IN AUGUST 2016

  1. U.S. businesses have now added 15.1 million jobs since private-sector job growth turned positive in early 2010.Today, we learned that private employment rose by 126,000 jobs in August, following a robust average gain of 232,000 jobs in June and July. Total nonfarm employment rose by 151,000 jobs in August, below the monthly average for 2016 so far but substantially higher than the pace of about 80,000 jobs per month that CEA estimates is necessary to maintain a low and stable unemployment rate given the impact of demographic trends on labor force participation.The unemployment rate held steady at 4.9 percent in August. The labor force participation rate remained at 62.8 percent, the same rate as in October 2013 despite downward pressure from demographic trends. So far in 2016, nominal earnings for private-sector workers have increased at an annual rate of 2.8 percent, well above the pace of inflation (1.3 percent as of July, the latest data available).
  2. As the labor market has strengthened, the share of employees quitting their jobs has recovered to roughly its pre-recession average.The quits rate tends to fall in recessions and rise in recoveries, since workers are generally more likely to choose to leave a job if there are job opportunities available elsewhere. As such, a higher quits rate is a sign of a stronger labor market. The chart below plots data from the Job Openings and Labor Turnover Survey (JOLTS) on both quits (voluntary separations) and layoffs and discharges (involuntary separations). The quits rate plummeted in the Great Recession as the layoffs and discharges rate rose sharply. Since then, as the labor market has recovered, the layoffs and discharges rate has fallen well below its pre-recession average, and the quits rate was near its pre-recession average as of June 2016 (the most recent data available). Nevertheless, the quits rate is still below its level in the early 2000s, part of a broader, decades-long trend ofdeclining labor market fluiditywhose causes and consequences continue to be debated by economists.
  3. Workers in nearly all private industries have seen their unemployment rates recover and fall below their pre-recession averages.The headline unemployment rate recovered to its pre-recession average of 5.3 percent in June 2015 and has since fallen even further, holding steady at 4.9 percent in August 2016. As shown in the chart below, the impact of the Great Recession varied across industries, with mining, quarrying, and oil and gas extraction workers, manufacturing workers, and construction workers in particular seeing large increases in their unemployment rates. As of August, however, unemployment rates for workers in 9 of the 11 major private industries have fallen below their respective pre-recession averages. The two exceptions are education and health services workers, whose unemployment rate has essentially recovered to its pre-recession average of 3.3 percent, and mining, quarrying, and oil and gas extraction workers, whose unemployment rate nearly recovered before increasing since mid-2014 amid falling oil prices and production (see point 4 below).Jobs 0816-2
  4. Employment in the mining and logging industry, which includes oil and gas extraction, has fallen sharply in recent months amid low oil prices.While the decline in oil priceshas benefitted consumers and the economy overall, it has weighed heavily on mining and logging employment, which has fallen by 25 percent since September 2014. Oil and gas workers make up more than half of the mining and logging industry; however, this sector represents just 0.5 percent of total U.S. nonfarm employment. The level of mining and logging employment is closely correlated with the price of oil, with shifts in employment usually following price changes, as the chart below shows. Since 2000, mining and logging employment has been most closely correlated with the price of oil eight months before, suggesting that the recent slight moderation in oil prices since the beginning of 2016 may translate into a slowdown in the pace of employment losses in the months ahead.
  5. The distribution of job growth across industries in August was broadly consistent with the pattern over the past year, though some industries saw below-trend growth.Above-average gains relative to the past year were seen in transportation and warehousing (+15,000) and State and local government (+24,000), while mining and logging (which includes oil extraction) posted a smaller loss (-4,000) than in recent months. On the other hand, several industries, including professional and business services (+25,000, excluding temporary help services), health care and social assistance (+36,000), private educational services (+2,000), and utilities (-1,000) saw weaker-than-average growth. Slow global growth has weighed on the manufacturing sector, which is more export-oriented than other industries and which posted a loss of 14,000 jobs in August.Across the 17 industries shown below, the correlation between the most recent one-month percent change and the average percent change over the last twelve months was 0.82, in line with the average correlation over the last year.

As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report, and it is informative to consider each report in the context of other data as they become available.

Obama Proposes New ‘First Job’ Funding to Connect Young Americans with Jobs, Skills Training to Start Their Careers

 

President Obama speaking at a Brooklyn School, is proposing First Job funding to connect young Americans with jobs and skills training to get a leg up on the ladder of career success © 2016 Karen Rubin/news-photos-features.com
President Obama speaking at a Brooklyn School, is proposing First Job funding to connect young Americans with jobs and skills training to get a leg up on the ladder of career success © 2016 Karen Rubin/news-photos-features.com

“We need to do everything we can to make sure America’s young people get the opportunity to earn the skills and a work ethic that come with a job.  It’s important for their future, and for America’s.”

– President Barack Obama

“After the worst economic crisis of our lifetimes, the United States is in the midst of the longest streak of private-sector job growth in our history, with more than 14 million new jobs created during the past 70 months. But for too many young people, getting a first job—a crucial step in starting their career—is challenging. One of the main criteria employers screen for in the hiring process is work experience. Previous experience allows potential employers to call references who can vouch for a candidate and assess what someone can do based on past accomplishments. Additionally, many of the skills employers value most can only be learned on the job. Once a young person gets their first job, it is much easier to get the next one,” the White House stated in a Fact Sheet explaining funding for a new program to connect young people with jobs and career training.

“In his State of the Union Address, the President made clear that our goal is a growing economy that works better for everybody. The President’s FY 2017 Budget includes nearly $6 billion in new funding to help more than 1 million young people gain the work experience, skills, and networks that come from having a first job.  Today, the White House and the Departments of Labor and Education announced the details of that plan, including nearly doubling last year’s budget request for supporting young people who are out of school and work.”

Republicans are fond of decrying the fact that so many young people have had to live in the parents’ house because they can’t afford to set up their own household (though you hear less of that now that the economy has clearly rebounded). They attack the lack of real increase in wage growth. Yet they do nothing about it – nothing to invest in infrastructure to stimulate jobs and wages, nothing to address student debt by keeping interest rates artificially high, nothing to promote college affordability or jobs creation.

The proposal that President Obama has made would address many of these issues. Let’s see if Republicans support it, or return to their mantra of “curing” every problem by calling for reduced taxes and regulation.

Major investments of Obama’s plan include:

  • A New $5.5 Billion Proposal to Open Doors to a First Job.The President’s Budget will propose new investments – nearly double last year’s request – to connect more than 1 million young people to first jobs over the summer and year-round. It would also create a new $2 billion competitive grant program design