Friday, November 07, 2014

Job gains and voter anxiety

                                                       
                                                      Comment by Nov. 15, 2014

Only days after many voters complained that the economy was getting
worse, the latest government report on jobs, released Friday, provided fresh
evidence that it was getting better. Employers added an estimated 214,000
jobs in October, the Labor Department found, and the official jobless rate,
bolstered by a big rise in the number of people finding jobs, dropped to 5.8
percent, down sharply from 7.2 percent last October.
The increase, combined with a revision that showed 31,000 jobs were
added to the numbers previously reported for August and September, puts
the average monthly employment gain for the past six months at 235,000 —
an indication, analysts said, that the economy’s progress was gaining
momentum.
A range of other job measures all improved. More than 683,000 people
reported that they found a job last month, according to a separate survey by
the Labor Department. And the number of people walking away from the
labor market has halted, while the average number of hours worked ticked
up.
The primary disappointment was the lack of wage growth. Hourly
average earnings have remained stuck, rising only 0.1 percent in October, on
the heels of no gain in September. For the year, wage gains are up just 2
percent, barely ahead of the pace of inflation. That lack of progress is likely
to cause the Federal Reserve to move cautiously before raising interest rates
from their near-zero level.
Still, several economist were encouraged by the October numbers.
“Labor force participation actually rose” to 62.8 percent, said Carl
Tannenbaum, chief economist at the Northern Trust Company. “We didn’t
see a drop in employment because people dropped out of the work force. “
Looking back at the changes since last year, Mr. Tannenbaum noted
that there had been a sizable decrease in the number of discouraged
workers, who have given up hope of finding a job — down 1.2 million — and
of part-time workers who wanted full-time employment, down 1 million.
A broader measure of unemployment that includes discouraged job
seekers or those stuck in part-time jobs dropped to 11.5 percent, down more
than 2 points from the seasonally adjusted figure from a year ago. The 5.8
percent official unemployment rate is the lowest since the summer of 2008.
“We think this is a very strong report,” said Michael Gapen, an
economist at Barclays, noting that the number of hours worked was on the
upswing, rising 4.2 percent in the fourth quarter.
This latest report represents 56 consecutive months of private-sector
job growth, which Jason Furman, chairman of President Obama’s Council of
Economic Advisers, characterized this week as “the longest streak in U.S.
history.”
Yet, as Mr. Furman and other economic experts readily acknowledge,
the experience of many Americans does not match the growing optimism
about the job market and the overall economy recently expressed by several
analysts.
Election Day exit polls found that 78 percent of those surveyed were
very or somewhat worried about the future direction of the economy, while
two-thirds said they believed the economy was getting worse.
For many Americans, it still is. Even though the recovery from the
recession is in its sixth year, stagnant wages, an economy generating jobs
mostly at the bottom and the top rather than in the middle, and vast
disparities between the rewards bestowed on the rich and on ordinary
workers have left many people disenchanted with their economic prospects.
Some analysts now see signs that a tighter labor market may lead to
higher wages in the near future. “The job market is steadily picking up pace,”
said Mark Zandi, chief economist at Moody’s Analytics, reacting to a report
from the payroll processor ADP this week that private-sector employment
increased by 230,000 jobs in October.
“The job market will soon be tight enough to support a meaningful
acceleration in wage growth,” he added.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, was
also predicting that “faster productivity growth would drive real wages
higher next year, after a very long wait.”
The question is how much and how quickly.
Over the year, average hourly earnings have risen by just 2 percent, only
slightly ahead of the pace of inflation. “We are adding jobs, but it is still a
wageless recovery,” said Elise Gould, an economist with the left-leaning
Economic Policy Institute, who said she was disappointed by the lack of
progress on wages in October. . “The economy may be growing but not
enough for workers to feel the effects in their paychecks.”
In a report, the institute argued “that wage growth is far below the 3.5
percent rate consistent with the Federal Reserve Board’s inflation target of 2
percent, and far below the 4 percent rate that could easily be absorbed for a
while to restore labor’s share of national income from its current historic
lows.”
Steve Blitz, chief economist at ITG Investment Research, said the
report’s mixed signals indicated the economy was not necessarily gaining
momentum. “While many tout the pace of job increases so far this year as
signal of a budding strong consumer economy, the details suggest
otherwise,” he noted. Average hourly wages remain stuck, “which continues
the downside pressure on real earnings growth after paying for food,
gasoline and rent.”
The lack of wage growth, particularly at the bottom, helps explain why
ballot measures to raise the minimum wage in Alaska, Arkansas, Nebraska,
Illinois and South Dakota all passed despite widespread losses among
Democrats in those states who supported such measures.
While stagnant wages remain one of the biggest problems in the
economy, the recovery appears to be gaining momentum.
The four-week moving average for new unemployment insurance
claims, considered a more reliable indicator than the week-to-week
fluctuations, hit a 14-year low last week. For the federal fiscal year that
ended on Sept. 30, the number of bankruptcy cases filed in federal courts
dropped 13 percent to 963,739, the lowest since the 2007 fiscal year. And
consumers, bolstered by falling gasoline prices, are more upbeat about job
prospects than at any time in the past six years.
The job gains in the food and service industry noted by the Labor
Department are coming from small-business employers like Matthew
Saravay, who runs Wizard Studios, a special event production company in
Brooklyn. “The economy’s gotten better and people are spending money,”
Mr. Saravay said. “I have interviews lined up, trying to keep up with the
clamor of opportunity. We’re seeing holiday parties return in a way I haven’t
seen in seven or eight years. This is such a paradigm shift from what we’ve
been experiencing for the past half decade.”
Steve Roesner, chief executive officer of Quatro Composites in Iowa,
which produces structures for manufacturers in the aerospace industry,
hired 100 new workers this year, bringing the company’s total staff to 220.
He said he expected to increase his work force 20 percent more next year.
“In our industry, there’s a lot of optimism,” Mr. Roesner said. He attributed
the boom, in part, to technological advances.
Jay Floersch, a solutions architect at Aon Hewitt, a human resources
consulting firm, said business had picked up significantly in recent months.
“We’re exceeding our own forecasts,” he said, noting that “seasonal
hiring is peaking right now.”
Looking ahead, Tara M. Sinclair, an economist at Indeed.com, one of
the nation’s largest sites for job postings, said: “We seem to be reaching a
tipping point in terms of job market maturity. Should this positive trend
continue, we should expect people to stop looking for ‘a job’ and start to look
for ‘the right job. (NYT)

10 comments:

Vinona Rugova said...

It is great that the amount of new jobs in the market have increased but wages are still low. Also like we said in class, there are many more jobs available compared to what people qualify for. The skills required for certain jobs are not possessed by many people. So even though these jobs are available, people still won't be able to get those jobs and they will unemployed. They may also become discouraged if they can't find any job that they qualify for. The amount of people getting a degree could be better but the problem is that college is to expensive for a lot of people. Students are in a lot of debt. I feel like once education is improved upon, then a lot of the problems that are occurring will be solved.

Ryan Aquino said...

Although there is great optimism with the current unemployment rate percentage, the lack of wage growth dampens the positivity of the unemployment numbers. With a current unemployment rate of 5.8%, the lowest since 2008, it would seem as if the economy was getting back to it's old prosperous ways, but this is not the case. In October, the hourly wage reports only went up 0.1% following no gain in September, and just a 2% increase on the whole year. This is barely staying above the pace of inflation which correlatively will not help our economy. If the U.S. wants to have a flourishing economy, the hourly wage reports must see a drastic increase which will make the lowering unemployment percentages hold more weight.

Anonymous said...

Marissa Cotroneo said.....
Although the percent of unemployment has been decreasing dramatically, people do not believe it. People believe that the government is lying. They also believe that the government is not accurately determining the unemployment percent because they are not including the people who have given up on getting a job and people who are in between jobs. Even though the percentage of jobs have increased the wages of those jobs are still not that high. With inflation happening constantly it is hard to keep up with the high prices when you have a low paying job. Another problem is that some people are still not educated enough to get some of the jobs that are being offered. So in conclusion although the unemployment rate is decreasing, we still have a lot of problems with our economy

Matthew Kurdewan said...

The new report shows that unemployment has reduced and shows that more people are getting jobs. Also the article states that the unemployment fell not because people were leaving the workforce but because people are finding jobs. The one thing that is disappointing is the lack of increase of wages nationwide. People are getting jobs but at low wages, wages that are not keeping up with inflation. There is some positivity coming from people around the country with the drop in gas prices. Businesses are starting to hire more people, including a special event production company and an aerospace manufacturer. The article states that if this positive trend continues people hopefully won't just be searching for a job but for a job they want.

Brenden Wisnewski said...

It is great to see that the unemployment rate is finally dropping and now there are more and more jobs available each month. But the problem is that we have more and more jobs but wages are not increasing. In New York, the current minimum wage is $8.00 per hour. If you do the math, a single person working full time for minimum wage will make about $16,640 a year. I do not believe that $16,640 is enough to have a decent standard of living in especially in the state of New York. Now that unemployment rates are dropping, inflation will increase and the wages that we are providing these workers will not be enough to keep up with inflation.

Brittany King said...

This article discusses the reported increase in employment and job opportunities and the corresponding drop in the unemployment rate. Additionally, this article talks about the microscopical increase in wages.
I believe that the increase in jobs reported as of the first Friday of this month is due to seasonal hiring for the upcoming holiday season, therefore it is nothing to get excited about. Not only do I believe that unemployment is decreasing due to the holidays arriving but also the government fails to take into consideration those that have given up on finding a job and those that are in between jobs and are no longer eligible for unemployment. Although the decrease in unemployment is great, the important question is: is this only a temporary reprieve or will unemployment continue to decrease in the long run. If unemployment continues to remain the same after the holiday season then it is truly decreasing, and hopefully leading to a better economy.
As for the disappointing lack of wage growth, average hourly earnings has only increased by 0.1 percent. If my theory is correct that the jobs added were seasonal, it stands to reason that most of the positions added were hourly retail minimum wage positions. Most Americans believe that this is a rising issue as one cannot live comfortably on minimum wage, but fail to realize that if average hourly wage increases, prices will also go up.

Stamyr R said...

This article stats that the unemployment rate is finally decreasing in the U.S. This is great news since the recession that happened in 2007. The increase in job opportunities is a great thing and shows that the economy is moving to a better path. However, one concern that I have is that the types of jobs that are available are ones that do not fit the skill level of Americans at this time. Since the recession, people have been struggling financially and some haven't been able to go to college so are not at an educational skill level necessary for certain needed jobs at the time. I feel that in time, as long as these jobs are still available that will improve and Americans will be able to keep up.

Doris Da Silva said...

Although the unemployment rate had decreased in such dramatic way, the wages are still low. This shows that people are finding jobs but at low wages. The average hourly wage in October went up only 0.1% and almost no increase in September. For the year there was only a 2%. Americans have been struggling to find jobs since the recession but this article shows us that there is potential growth in the workforce to continue decreasing the unemployment rate. At the same time Americans need to get qualified with skills that some jobs required in order to increase the wage rate.

Anonymous said...

The fact that there are new jobs in work force are great for people looking for jobs. The main problem is that people aren't qualified for those jobs. When people start to getting qualified for the jobs it will improve the unemployment rate better then it is right now. The increase of jobs are shocking because I thought that it would be slower than it is. With people getting more jobs there will be more demand for goods. With more demand for good the price of goods could go up. With the increase if price it could slowly cause inflation. This is what we talk about in class and the only sector that can do anything is government. The other issues is wages and if they should go up or down. With increase in wages it could also decrease the unemployment.
Bryan Rivers

Anonymous said...

It is good to see that the rate of unemployment is lower and the rate that people are being hired and finding jobs has risen. But it is sad to see that the wage growth is barely above inflation, wages should reflect inflation. But at the same time people might not understand where their money goes that the raise, even though it is above inflation is barely helping.
Jobs should be created for all parts of the country, lower, middle, and upper. Unfortunately each job requires a skill set that might need verification of education, and not someone who is self taught without a degree.
With time everything will be corrected and hopefully people will find jobs that fit them and people might create their own jobs in place of looking for a job that already exists.

Beverly Levine