Despite distortions, September’s hurricane-soaked jobs report still reveals an improving jobs market finally starting to deliver the pay raises Americans have been waiting for. Job growth, however, slowed in September to -33,000 after averaging 148,000 over the past 12 months. Hurricanes Harvey and Irma are likely to blame: unemployment insurance data indicate that more than 90,000 Texans were laid off due to Hurricane Harvey alone, and today’s report finds a whopping 4.4 million temporarily out of work, or cut to part-time, due to the hurricane. Given these natural disasters, it’s hard to read much into these payroll numbers with certainty, especially given preliminary reports that payrolls were weaker than first reported this summer.
The positive news can be found in the household survey, which the Department of Labor says was unaffected by the hurricanes. The unemployment rate dropped to 4.2 in September, its lowest level since February 2001. More importantly, the stronger economy continues to draw more Americans into the workforce: the labor force participation rate ticked up to 63.1 percent (its highest level since March 2014). As a result, the percentage of working-age (25–54) Americans with a job pushed up to 78.9%, the highest level thus far in the recovery.
What most Americans have been waiting for is a raise—and this month’s results indicate that the tightening job market is finally forcing some employers to up pay. Average hourly wages of all workers are now growing at a rate of 2.9 percent, inching towards a 3 to 4 percent growth associated with an economy where employers raise wages aggressively to compete for workers. With inflation ticking up in August to close to 2 percent, stronger wage growth is a must for families trying to make ends meet. The wage trend is not yet clear—the pay of front-line non-supervisory workers (80 percent of all U.S. workers) is still not improving, and grew by only 2.5 percent in September. Restaurants lost 100,000 jobs in September (some undoubtedly in Hurricane regions) and the elimination of these low wage jobs may be distorting the wage trends. Like most things in this report, the true trend will be revealed only in the months ahead.
One sector that has complained about a shortage of skilled workers is manufacturing. The numbers here are mixed. On the heels of the best production numbers in 13 years, the nation’s factories lost 1,000 jobs in September, after a gain of 41,000 jobs in August.
September Focus: Public School Employment
September’s report means it’s back to school, and back to new data on public education employment. Despite steady employment growth in the private sector, public school employment is still below pre-recession levels—meaning that the number of school workers is still less than it was a decade ago. This is bad news, considering that the number of kids in primary and secondary school is growing. School population went up by 4 percent from 2000 to 2013, and is expected to go up 2 percent more from 2013 to 2024, while the number of teachers has not. This means that class sizes and student-teacher ratios are growing, which research shows is bad for children’s achievement, especially at younger ages. Pupil-to-teacher ratios in elementary schools rose from 15.3 in 2008 to 16.1 in 2014. Federal and state budgets continue to pull the budgetary rug out from under our local generation-building institutions, complicating efforts to invest in school personnel. As state and federal sources of funding for K-12 education have been cut in recent years, local municipalities have not been able to cover the difference, and we’re seeing the effects.
Budget cuts have put pressure on employment as well as on wages, so it is important to secure funding not only for new teachers, but also to keep wages competitive. Wages for teachers are notoriously low considering the importance of education in our society and economy. Teachers’ earnings are below pre-recession levels, falling precipitously after 2009 and only starting to pick up post-sequester in 2014. With alternative sectors becoming economically more attractive, it may be difficult for school districts to hire and retain teachers even if they want to. Especially as Baby Boomers retire, schools will need to find replacements for the 15 percent of primary and secondary school teachers who are above age 60. A 2015 EPI study shows that the “teacher pay gap,” or the difference between teacher’s wages and those of comparable professional’s wages, grew from 1.8 percent in 1994 to 17 percent in 2015. According to the EPI, real average wages for elementary and secondary school teachers are lower now than they were in 1994. Teachers who are union members have a smaller wage gap than nonunion teachers; however, unionization rates are declining.
The slump in public education employment is a symptom of stagnating government employment overall, which has only recently caught up to pre-recessionary levels. To keep up the agencies and services which government provides, we would expect employment to increase alongside the population. However, as of 2010, this is not happening (Figure 3). Lack of employment in government means that government expenditure is lower than it could be if it were maintaining a higher level of employment—missing spending that would have added to the multiplier effect on overall economic growth.
Government jobs make up 15–20 percent of total employment, and this tepid performance is an underappreciated aspect of the overall job market story of the past several years of the recovery. It is especially important because public employment is also a positive force of equity. Women and people of color have disproportionately worked in government, in part thanks to a commitment to anti-discriminatory hiring practices. The public sector abides by more strict labor regulations, including working hours and stability in payment. Government jobs are more frequently unionized than private sector jobs, and workers are more likely to have a secure pension. Suppression in government employment is a barrier for groups of people who are historically worse off to begin with.
Education workers are just one example of groups of workers that are still not benefiting from the economic recovery. A combination of policy change and economic expansion will be needed to spread the benefits of the recovery more broadly in the economy. Working families have been waiting for the point that the economic recovery truly starts to lift their pay—and it’s clear that we will need many more months of jobs growth to get there.