Just how good were those November jobs numbers? With the economy creating 266,000 new jobs and unemployment hitting a 50 year low, one might say they were “tremendous.” But looking at one month out of context can distort the broader picture. Fortunately for American workers, both the short term and the long term trends are also excellent.
It’s hard to argue with an employment rate at 3.5 percent. Particularly when this rising tide of a strong labor market is lifting all the boats. The unemployment rate for African Americans (5.5 percent), Hispanic Americans (4.2 percent), Asian Americans (2.6 percent) and women (3.5 percent) all remained near record lows in November.
But, it’s important to examine the reasons behind the extremely low rates. For example, while the unemployment rate can decline as more people find jobs, it can also decline simply because people give up and stop looking for work or retire. If someone hasn’t looked for a job in the last thirty days, the Bureau of Labor Statistics (“BLS”) no longer counts them as unemployed. Rather, it counts them out of the labor force. The best scenario for American workers is when the unemployment rate declines while people are joining – rather than leaving – the labor force. (RELATED: PUZDER: Impeachment Has A Silver Lining — Trump’s Killer Trade Deal)
To illustrate, during the Obama era, the percentage of people in the labor force declined from 65.7 percent to 62.9 percent, while the unemployment rate declined from 7.8 percent to 4.7 percent. Had labor participation stayed at 65.7 percent, the unemployment rate when President Obama left office would have been 9 percent, or higher than when he took office. In other words, people leaving the labor force accounted for much of the decline in unemployment during the Obama presidency.
Over the past 3 years, that trend has reversed with the unemployment rate declining despite an increase in people joining the labor force. Since President Trump took office nearly three years ago, the percentage of people in the labor force has increased from 62.9 percent to 63.2 percent while the unemployment rate has declined from 4.7 percent to 3.5 percent. Had labor participation stayed at 62.9 percent, the unemployment rate in November would have been even lower at 3 percent.
So, under President Trump, unemployment has declined despite an increase in labor participation (more people looking for jobs) because more people are actually finding jobs and at a faster pace than they are entering — and reentering — the labor force. That’s great news for American workers. (RELATED: MOORE: The Only Reason For Recession? The Prospect Of Trump Ever Leaving Office)
Why has this occurred? Well, American businesses have created an enormous number of jobs over the past three years, particularly since President Trump signed the Tax Cuts and Jobs Act into law in December of 2017.
In fact, in March of 2018, the number of job openings exceeded the number of people unemployed for the first time since the BLS began reporting the data, it started a trend. September (the most recent month for which we have the data), was the 19th consecutive month with job openings exceeding people unemployed and the 15th out of the last 16 months with over 1 million more job openings than people unemployed.
That positive news is manifesting itself in wage increases as employers compete for employees. At 3.1 percent, November was the 16th consecutive month with year over year wage growth at or above 3 percent. That means for the past four months, we’ve had 3 percent or better wage growth this year on top of 3 percent or better wage growth last year. Prior to this streak, the last time wage growth even hit 3 percent was April of 2009 — over a decade ago.
To put this increase in context, if you were making the average hourly wage in November of 2017 and working 40 hours a week, your annual income would have been $55,224. If your salary increased consistent with the average increase, your salary over the next two years would have increased to over $58,843 a year for a $3,619 annual salary increase. That’s real money. And, with the tax cuts, you would be taking home more of those dollars every paycheck.
Perhaps even more significantly, that wage growth benefited workers far more than their managers. In November, wages growth for workers and managers combined was 3.1 percent. Workers (who make up 80 percent of the workforce) saw an even higher increase of 3.7 percent, which means managers saw an increase of less than 1 percent.
Traditionally low wage workers may have benefited most of all. For example, the retail sector saw a 3.9 percent year over year increase this November after a 4.3 percent increase last November. Restaurant and hotel workers saw a 4.3 percent increase this year after a 4.3 percent increase last year. This is a working class economy, which helps explain why for the past year it’s been harder to find blue collar workers than white collar workers for the first time in decades.
More people are working, they are making more money and they are taking home more of what they earn. Heading into 2020, American workers are better off than they have been in decades. That will have an impact in the upcoming election. It’s hard to convince voters to change the status quo when it is so resoundingly benefiting them.
Andy Puzder (@AndyPuzder) was the chief executive officer of CKE Restaurants for more than 16 years after a career as a trial attorney. He was nominated by President Trump to serve as U.S. labor secretary. He is the author of “The Capitalist Comeback: The Trump Boom and the Left’s Plot to Stop It,” and co-author of “Job Creation: How It Really Works and Why Government Doesn’t Understand It.”
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.
