November Unemployment Report: Unemployment drops to 4.6%. Wages Sink 3 cents

In November, the BLS reported that the unemployment rate declined to 4.6% as 178,000 new jobs were created.  Wages dropped $0.03 cents. The number of unemployed person dropped -387,000 to 7.4 million people.  There were large increases in payrolls in the industry categories of business services, healthcare, leisure and construction.

The labor force participation rate stayed at 62.7% and the employment to population ratio was 59.7%. Both rates have leveled off and are largely unchanged in the past two years. LFP measures how many people participate in the job market.  It has dropped significantly since the recession. 

There were  a couple of positive long-term trends. The long term unemployed (out of work for more than 26 weeks) decreased to 1.856,000. The level is well below 2 million. The number of people working part time for economic reasons also dropped -220,000 to 5.67 million workers.

The Big Story

The big story is the continuing lack of wage growth for workers.  If the economy is near full employment, there should be wage growth and wage inflation.  There is none. So the US economy has failed to deliver good paying jobs to its citizens. 

The chart below shows the national unemployment rate.

In November, 178,000 jobs were added by US business establishments. The 4 month moving average has dropped to 170K during the fall slowdown in job creation.   

The Black unemployment rate dropped to 8.1% from 8.6% last month as 154,000 more people reported working. The unemployment rate for Black men, 20 and order, was 7.7% while Black women in the same age group were unemployed at a rate of 7.1%.  Black men participate in the labor market at a 67.5% rate while the participation rate for Black women is 62.6%. Black teenage unemployment was calculated at 26%. 

The real Black unemployment rate was pegged at 12.6% in November. Both the Black unemployment rate and the US U-6 rate declined during the period.   U-6 is the broadest measure of unemployment. U-6 is basically anyone who wants to work and has looked for a job in the past 12 months.

 Blacks has an unemployment rate of 8.1%, the White rate was 4.4% and the Hispanic/Latino rate was 5.7%.

The business survey showed the usually job growth categories: Business Services, Healthcare and Leisure.  Manufacturing lost -4,000 jobs.

There were big gains in business services, health care and leisure. Construction added 19,000 jobs.

 The united states continues to move toward a service economy.  Only 19% of new jobs produce goods (15% if you include government as a service).

Hourly wages declined by $-0.03 cent in November to $25.89.  Hourly wages are up about 2.5% (1.2% when adjusted for inflation) in the past year.

The average growth in wages has been below 1% after inflation between 2006 to 2016.

ADP reported 216,000 non farm payroll jobs were created.  The jobs were split among small businesses (+37K), medium sized businesses (+89K) and large businesses (+90K).  According to ADP goods producing business shed -11K jobs while services hired 228K workers. Manufacturing lsot -10K jobs.

Paychex small business jobs index was flat at 100.38; a completely neutral value.