Keep your guard up. You’re liable to see an increase in negative talk about the American job market, especially now that the July job report was just released by the Bureau of Labor Statistics., and especially as we’re getting into political silly season.
Don’t listen to a word of it.
While it’s true the job market created “only” 187,000 jobs, and that’s the second straight month with fewer than 200K, and we’re averaging “only” 223,000 monthly this year (as opposed to 400K+ in 2022 and 500K+ in 2021), that’s no way to assess this market. It’s much more complex than that.
In fact, by every measure, the American job market is continuing to perform well; we just need to know how to look at it.
First, that 187K may look low if you’re fixated on the astronomical growth of the last three years, that growth that drove the largest and fastest recovery in history, but it’s still a rate of 52% better than what we need to keep up with population growth.
Steady, admirable growth numbers
Our civilian labor force grew by 3.11 million over the last 12 months, currently sitting at 167.1 million. That’s almost exactly half our total population – which it traditionally is – and that means that to keep up with population growth, (births minus deaths plus immigration) we’d need to add 1.45 million jobs per year, or 120,000 per month.
Further, over the last 12 months, 2.99 million Americans found employment, and whenever you see growths of the civilian labor force and the employed being so close together – almost identical, in fact – you’re looking at a condition of extraordinary equity. Basically, if you decided to get into the job market, you found a job.
Jobs created and unemployment down again
Among the more common numbers, the unemployment rate fell – again. We’re now at 3.5%, considered, historically, full employment. And we’ve been holding steady between 2.4% and 3.7% for 17 consecutive months.
But is this success shared? Well: health care added 63K jobs, social assistance 24K, financial activities 19K, wholesale trade 18K, other services 20K, construction 19K, leisure and hospitality 17K, and all others little or no change. In essence, while it wasn’t a banner month for all, it wasn’t a bad month for any.
More jobs and bigger paychecks
And while all this was going on, wages rose strongly again: another 0.4% last month and a rate of 4.4% over last year.
In other words, more people are looking for work, finding it, and making more money while they’re at it. Oh, and yes, inflation is continuing to fall, and we’ve been, for the last three months, in a situation where income is, once again, rising faster than inflation.
No job market in the universe can keep up the incredible numbers of the last 30 months; unlimited growth like that is impossible. But think of it like a Boeing 767 taking off and rising until it gets to its cruising altitude of 37,000 feet or so. That ascent was what we did for two and a half years; now we’ve leveled off. Just what we want.
More and more commentators are getting comfortable with the now frequently-used expression that the American job market is the envy of the world.
They should. It is.
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