Jason Furman
WASHINGTON, DC – Jason Furman, Chairman
of the Council of Economic Advisers, issued the following statement today on
the employment situation in November.
Summary: The economy added 211,000
jobs in November, marking the strongest three years of job creation since 2000.
The strong pace of job growth
continued in November as the unemployment rate held at its lowest level since
April 2008 and labor force participation ticked up. We have added more jobs
over the past three years than in any three-year period since 2000, and wages
are continuing to rise. Nevertheless, we have more work to do to drive further
job creation and faster wage growth. That’s why Congress should take steps
including passing a complete budget that builds on October’s bipartisan budget
agreement, approving the Trans-Pacific Partnership to open our exports to new
markets, and raising the minimum wage.
FIVE KEY POINTS ON THE LABOR
MARKET IN NOVEMBER 2015
1. Our businesses have now added
13.7 million jobs over 69 straight months, extending the longest streak on
record.
Today we learned that private-sector employment rose by 197,000 jobs in
November. Private employment growth in September and October was revised up
by a combined 52,000 jobs, bringing October’s growth to 304,000—the best month
of the year so far. The unemployment rate held at 5.0 percent in November, even
as labor force participation edged up to 62.5 percent. Wages continued to rise;
nominal average hourly earnings for all private employees have now risen 2.3
percent over the past year. Overall, our economy has created 8.1 million jobs
over the past thirty-six months, the fastest pace since 2000.
Click on graph to enlarge it.
2. The
unemployment rate has consistently fallen much faster than economists expected
throughout this recovery, reaching 5.0 percent considerably earlier than
projected. The chart below shows the median paths of the
unemployment rate forecasted in each of the past four years by a large panel of
private-sector economists. Each year the unemployment rate declined markedly
faster than economists expected, a testament to the remarkable pace of
employment growth observed throughout this recovery. As of March 2014,
economists expected the unemployment rate to remain above 5.0 percent at least
until 2020. Even as recently as March 2015, they expected unemployment to
average 5.0 percent throughout 2016—but it reached that level just last month.
Of course, the recovery in the unemployment rate does not tell the entire story
of the labor market recovery, and important challenges (such as wage growth,
discussed in point 3, and non-demographic components of labor force
participation) remain. But the strong progress so far is encouraging evidence
of the health of our labor market.
3. Average
hourly earnings for all private-sector workers rose 2.3 percent over the past
twelve months, a somewhat faster pace than the average over this recovery. Although
earnings growth has not yet reached desirable levels, it increased amid the
strong pace of employment growth over the past year. At the same time,
declining energy prices have driven inflation to especially low levels,
benefiting wage-earners by further boosting real (inflation-adjusted) earnings
growth. Even over the past three years, real hourly earnings for production and
non-supervisory workers have risen 1.6 percent per year, well above the average
annual pace of 0.5 percent during the previous economic expansion. The recent
uptrend in nominal earnings growth is an encouraging sign for the labor market,
but because nominal earnings often grow between 3 and 4 percent during
expansions, there is more work to do to boost wages as the recovery continues.
4. The
demographic factors that boosted employment growth in previous decades have
been less supportive during this expansion, but the recovery in our
unemployment rate has been especially strong. Employment growth depends on
three factors: population growth, the extent to which the population
participates in the labor force, and the extent to which the labor force is
employed. The chart below decomposes employment growth into contributions from
each of these factors. It further decomposes labor force participation into
shifts attributable to demographics (such as the changing age distribution) and
shifts attributable to other factors (such as the increased participation of
women). Demographic factors boosted employment growth in previous decades, as population
grew faster than current rates and baby boomers reached working age. But in
this recovery, demographic factors have been less supportive as overall
population growth has slowed and the baby boomers have begun to retire.
However, the sharp decline in our unemployment rate—reflecting the depth of the
recession and the strength of our job market recovery—has contributed more to
employment growth than in any of the past five expansions.
5. Global headwinds weighed on
manufacturing and mining job growth in November, while industries less
sensitive to such factors continued to see robust gains. Above-average
gains relative to the past year were seen in industries such as construction
(+46,000), financial activities (+14,000), wholesale trade (+9,000), private
educational services (+8,000), and utilities (+2,000). At the same time,
manufacturing employment—which is especially sensitive to global growth—fell
slightly (-1,000). Mining and logging employment, which includes oil
extraction, continued to decline (-11,000) as low oil prices have slowed
investment. 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 0.85, somewhat above the average correlation over the
previous two 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.
Source: The White House, Office of the Press Secretary
