Less than 10 weeks before Election Day, there are two main stories about how the U.S. job market is doing, one positive and one negative. The positive story (mostly told by Democrats) holds that the job market, like the economy as a whole, is in basically solid shape. Job growth has been steady and occasionally outright strong. Unemployment is down. Wages are rising, albeit not as quickly as workers would like.
The negative story (told by Republicans) takes the same evidence and offers a different spin: Hiring has been consistent but much too slow to dig out of the hole left by the Great Recession. Unemployment is low only because so many people have given up looking for work. Wage growth is too weak to mean much for the many Americans struggling to make ends meet.
Friday’s jobs report, the third-to-last before voters head to the polls in November, offered evidence for both sides. Employers added 151,000 jobs in August, the Bureau of Labor Statistics reported; that’s the weakest growth since May, and a bit below economists’ expectations, but still not a bad number in absolute terms. The unemployment rate held steady at 4.9 percent for the third month in a row; hourly earnings rose modestly. The rest of the report fit the same basic pattern: a bit disappointing compared to June and July, but not bad overall.
Politically, the report was probably pretty much a wash. Hillary Clinton can keep pointing to the steady improvement in the economy under President Obama; Donald Trump can keep saying that improvement has been much slower than it should have been. Our “polls-plus” election forecast has generally considered the economy neutral in terms of its impact on the presidential race; Friday’s report seems unlikely to change that.
But economically, the jobs report probably deserves more credit than suggested by Friday’s headlines (“Jobs report whiffs,” blared Business Insider). Not because it was great — it wasn’t — but because if this is what a “whiff” looks like, the economy is in pretty solid shape. Over the past year, employers have added more than 2.4 million jobs and raised hourly pay by 2.4 percent (amid inflation that’s running at 1 percent per year or less), all despite a slowing global economy and mounting political uncertainty at home. The one true whiff — May’s gain of a measly 24,000 jobs — quickly proved to be a blip.
None of that erases the serious issues that remain in the U.S. economy. More than 6 million Americans are working part-time because they can’t find full-time jobs, a number that has barely budged so far this year. Millions of Americans abandoned the labor force during the recession and are now returning at a trickle, if that. Large groups of Americans — African-Americans, workers without a college degree, the long-term unemployed — continue to struggle. The trend lines, however, are headed in the right direction — and one month of disappointing-but-still-decent job growth doesn’t change that.
Here are a few more observations about today’s report:
Steady trend: The government revised down its estimate of June job growth a bit and revised up its estimate for July; the revisions pretty much offset each other, resulting in a net loss of an insignificant 1,000 jobs compared to prior estimates. Over the past three months, the U.S. has added an average of 232,000 jobs, the highest three-month average since January. Over the slightly longer term, the U.S. has added 2.4 million jobs in the past year; that trend has flattened out in recent months after falling for most of last year.
Services add jobs: Manufacturers, construction companies and oil and gas drillers all cut jobs in August, leaving the service sector to pick up the slack. Much of the job growth came in generally low-paying sectors such as retail and hospitality, although higher-wage industries such as finance and professional services also posted gains. (The government also added 25,000 jobs.) All told, average earnings rose 3 cents an hour; wage growth has been steady this year but isn’t accelerating.
More employed, more unemployed: The number of people with jobs rose in August, but so did the number of people actively looking for them. As a result, the unemployment rate held steady at 4.9 percent, which, taken on its own, is a fairly healthy figure. More disappointingly, the labor force participation rate — the share of adults either working or actively looking for work — was flat. That suggests the job market isn’t strong enough to draw workers off the sidelines. (On the other hand, the participation rate is up a bit over the past year; it’s risky to read too much into one month’s figures.)
