The Bureau of Labor Statistic’s October employment report showed solid economic growth, but it also shows why many Americans report unhappiness with the economy.
The headline figures contained good news. The household survey reported unemployment falling slightly—0.1 percentage points to 5.8 percent—the lowest rate since July 2008. People dropping out of the labor force did not cause the drop; labor-force participation actually ticked up. The employment-to-population ratio jumped 0.2 points to 59.2 percent—the highest rate since mid-2009.
The payroll survey contained more good news. It reported employers created 214,000 net new jobs in October. The food services and drinking places (+42,000), professional and business services (+37,000), mining and logging (+28,000), retail trade (+27,000), and health care (+24,000) sectors had the greatest gains. No sectors reported statistically significant job losses. The payroll survey also found average work hours edging up a tenth of an hour to 34.6 a week—the highest level since May 2008. In more good news, revisions to the August and September reports showed that employers created 31,000 more jobs those months than previously believed.
The October report continues a string of good economic news. Over the past year, employers have created an average of 222,000 jobs a month, while the unemployment rate has fallen 1.2 percentage points and the employment-to-population ratio has increased by 1.0 percentage point.
Nonetheless, polls show that most Americans consider the economy in poor shape. The exit polls from the midterm elections found that 70 percent of voters see America’s economic condition as either “not so good” or “poor.”
October’s jobs report helps explain the dichotomy. While unemployment has fallen over the past year, the average duration of unemployment has remained stubbornly high. The median unemployed worker has been looking for work for over three months. The average unemployment spell has lasted for seven and a half months—almost twice as long as before the recession hit. Unemployment has become more painful for workers; those who lose their jobs have much greater difficulty finding new ones.
Additionally, average hourly wage growth has slowed to a crawl. In October, it rose just 3 cents an hour. Over the past year, average wages have grown just 2.0 percent; the best measure of inflation shows prices rose 1.4 percent during that time. The real buying power of American workers has barely budged.
Today’s employment report had welcome news about labor market improvements—but the economy remains far from a satisfying recovery.
