Headline and Subtitle: “The latest jobs report shows no evidence of a potential economic recession. That doesn’t mean the economy is booming.” Alexia Fernández Campbel/ Vox August 2, 2019
Excerpts:
“The super-low unemployment rate, for example, didn’t budge in July at 3.7 percent. That’s still the lowest rate of unemployed Americans recorded since December 1969. …
Yet this good news doesn’t mean much to middle- and working-class families: Workers only got an average hourly pay raise of 8 cents in July, the same as a month earlier. …
Nearly every American who wants to work and is able to has snagged a job by now, and those who lose their jobs, or decide to leave, probably won’t have a hard time finding another position. …
But millions of Americans are working part-time jobs when they would rather get full-time gigs, or at least work more hours. The number of people in that group has been mostly shrinking but still added up to 4 million workers in July….
The latest pay data suggests that workers are still not benefiting much from the longest economic expansion in US history.”
The Narrative Arc: Good news but it’s meaningless. Repeat. End on a sour note.
Behind the Headlines:
If you want to get the raw facts without all the hand-wringing, go to the source. In this case that would be: The Employment Situation – July 2019 Bureau of Labor Statistics (BLS) August 2, 2019 https://www.bls.gov/news.release/empsit.nr0.htm Without commentary, here are a few bits from the BLS:
Total nonfarm payroll employment rose by 164,000 in July, and the unemployment rate was unchanged at 3.7 percent.
The number of persons employed part time for economic reasons (sometimes referred to as “involuntary part-time workers”) declined by 363,000 in July to 4.0 million. These are individuals who would have preferred full-time employment but were working part time.
Over the past 12 months, the number of involuntary part-time workers has declined by 604,000.
Now I’m going to provide some context for the above numbers with a little of my own commentary, starting with those involuntarily part-time workers:
Looking good, but what exactly is the situation of these workers? Why are they only part-time when they want full-time? We’ve got data for that: per Part-time workers: who are they? - Bureau of Labor Statistics, almost half are usually full-time workers but they’re going through a “slack” period at work - meaning their hours have been reduced due to lack of business or a lull between job assignments. Most of the rest just have part-time jobs and wished they had full-time jobs. How long are these involuntarily part-time workers in their predicament? I’ve got a table for that:
What the table tells us is that most involuntary part-time workers change their employment status within a month: almost a third are working full-time and a fifth have decided they only want to work part-time (“voluntary” part-timers). Another 4% are no longer working but not seeking work either (“out of the labor force”). And that’s only within the first month of working part-time involuntarily.
What about the pay? Granted, an average monthly wage gain of 8 cents per hour doesn’t sound like much. Then again, averages can obscure a lot of variation in the data. Wage growth varies by type of work and over the past year lower-wage occupations have experienced greater than average wage growth. For instance, the hourly wages of retail workers grew by 5.3% during the period of June 2018-June 2019, over three times the wage increase of education and health workers. And when you look at weekly earnings, the pattern is clear*:
The annual inflation rate for the United States was 1.6% for the same period as covered in the above table (the 12 months ending June 2019). Even after accounting for inflation, it’s hard to conclude** that “workers are still not benefiting much from the longest economic expansion in US history.” And the economy is indeed booming.
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* Decile: a tenth. First decile is the bottom 10th of wage earners. Quartile: A fourth. The first quartile is the bottom fourth of wage earners. Median: a point in the wage distribution where half the workers are below and half are above.
** Of course, many low paid workers are struggling and they need help to better their circumstances. But it’s important to remember that “first decile” workers tend to be young or new at their jobs. Most get raises within their first year of employment. One study estimated the minimum wage “exit rate” was around 67% within a year of employment. Also, many of the lowest-paid workers receive additional government assistance. According to the IRS, 25 million workers and families received an Earned Income Tax Credit (EITC) in 2018.