Politicians deal in exaggeration and deception, but sometimes you have to wonder if they even read the words that someone puts out in their name. Witness House Speaker Nancy Pelosi’s statement Friday on the surprisingly good monthly employment jobs report: “The October jobs report offers further evidence that the Republicans’ disastrous special interest agenda is hollowing out the middle class while enriching the wealthy and well-connected.”
What hipster doofus wrote that? The real news from October is that the labor market remains remarkably resilient despite this year’s downshift in the economy to 2% annual growth. Hundreds of thousands of workers are returning to the workforce, wage gains are healthy, and those gains continue to spread to non-rich corners of the labor force.
The private economy created a net 131,000 new jobs, which exceeded expectations, and which is even more notable given that some 42,000 jobs were lost due to the union strike against General Motors that was recently settled. Add upward revisions of 95,000 jobs in August and September, and job growth averaged 176,000 in the last three months. That’s more than the 167,000 a month for all of 2019, which means job creation is improving of late.
More impressive is that the labor force continues to expand, with 325,000 new entrants in October and more than a million since July. This lifted the labor force participation rate to 63.3%, which is rising despite baby boom retirements. The employment ratio for prime-age workers, age 25 to 54, rose to 80.3%, which is the highest since January 2007, as the nearby chart shows.
“Hollowing out the middle class”? Come on, Madame Speaker. The economy you’re describing is closer to the employment ratio during the Obama expansion, which was still 76.4% in January 2014, four and half years after the recession ended.
The current job market is attracting middle- and working-class workers who have been on the sidelines for years. Perhaps wages are now rising enough to make work more valuable than public benefits, or maybe job openings are finally available that meet their skills.
Whatever the reason, the jobless rate for African-Americans fell again to 5.4%, a new low since records have been kept, and the third successive month at 5.5% or lower so it’s not a statistical anomaly. The labor participation rate for Hispanic-Americans reached 67.3%, the best since September 2010.
The rise in average hourly earnings was more modest but has still averaged 3% over the last year. The average gains may be affected by the many new entrants into the labor force, who tend to be younger and thus less expensive to hire than the baby boomers who are retiring and leaving the workforce. The index of weekly payrolls has climbed by more than 4% in the last year, and even faster for production and nonsupervisory workers. Such are the benefits of a tight labor market that impels employers to pay more to retain and attract talent.
All of this bodes well for consumer spending going forward and makes a near-term recession even more unlikely. Prospects would be even better if President Trump calmed his trade disputes and gave business renewed confidence to invest.
The real threat to the middle class is a return to the antigrowth taxes and regulation that Mrs. Pelosi’s House majority would impose without the check of Mr. Trump and especially a Republican Senate. Enjoy this labor market while we have it.
— The Wall Street Journal