Today’s Department of Labor report shows the job market continues to improve, and the sustained growth appears now to be expanding opportunity to those typically at the lower rungs of the job ladder.
Jobs grew by 242,000 in February, bringing monthly average job growth in 2016 to 211,000 after revisions. While manufacturing jobs continue to appear vulnerable, dropping by 16,000 jobs in February in the face of dampening global demand, recession fears are not supported by jobs data.The headline is real but still meek wage growth, with wages actually down by three cents in February, and the annual growth rate dipping to 2.2%. In fact, it was low-wage sectors of retail trade (+29,200) and hospitality (+65,000) that grew particularly strongly in February.
The job growth this year comes on the heels of five years of economic expansion that appear finally to be creating the kind of economic pressure that could spread prosperity more broadly. There’s some evidence of this type of progress when looking at racial dynamics of employment. The last time the economy managed to stay at full employment for several years in the late 1990s, robust labor demand spurred strong gains in employment for African-Americans. Indicators of this type of labor market tightness are beginning to appear. Over the past two years year, the black employment-population ratio has pushed up from 53.8 percent to 56.3 percent, and narrowed the black–white employment gap by 29 percent.
Figure 1. Black and White Employment Rates, 2014–16
So far, African American women have been the prime beneficiaries of these employment trends. Black women’s employment has exceeded that for white women for two years, and are now 1.7 percent more likely than white women to be employed. African-American women are less likely to be married and more dependent on labor market income, and are reaping the gains of a strengthening job market. White men are still much more likely than black men to hold jobs, and a recent report exposes that nearly half of young black men (aged 20–24) in cities like Chicago are out of school and out of work. Similar to previous economic periods, it will take a much longer and more robust expansion to deliver strong employment gains to black men, particularly young black men.
Figure 2. Employment Rates for Black and White Women over Age 20
As I’ve reported before, there is still tremendous slack in the labor market, particularly millions of prime age Americans missing from the labor force. While the unemployment rate today is at 4.9 percent and getting closer to pre-recession lows (4.5 percent in February 2007), other measures of labor underutilization continue to show more idle capacity. The “real” unemployment rate—including those who have dropped out of the labor force and those who are working part-time because they can’t find full time work—is still nearly ten percent (9.7 percent in February). In an extremely positive sign, the labor force participation rate jumped up by 0.2 percent in February to 62.9 percent (representing half a million Americans newly in the labor force, nearly all of them working), but this rate is still much lower than it should be at this point in the recovery. If Federal Reserve Bank does not act prematurely to tighten growth, the job market pressures can continue to give wages the chance to grow and provide many urban, rural and even suburban communities to get a fairer chance to benefit from today’s continued good news of expansion.