As The Associated Press told it, “Workers enjoyed their best pay raises in seven years last month as employers added 161,000 jobs, the government said in the last major snapshot of a slow but durable economy before Americans choose a new president.”
That narrative, which noted the unemployment rate fell to 4.9 percent and characterized the jobs market as “resilient,” came under the headline “U.S. workers gain jobs, raises in final pre-election report.”
One newspaper editorial even went as far as to opine that the “encouraging” October employment numbers “should warm the hearts of Americans.”
The headline: “Solid numbers.” A secondary headline touted the “strong economic news.”
But much of the media’s take on last month’s employment picture is incomplete and misleading, says Jake Haulk, president of the Allegheny Institute for Public Policy. (Full disclosure: I am a senior fellow at the Pittsburgh think tank.)
“Forget the headlines about unemployment falling in October,” the Ph.D. economist says. “Forget the 161,000 payroll employment increase; 19,000 was a government job gain.”
But Haulk says even the 142,000 private-sector gain is misleading. What we need to look at is the growth in aggregate hours worked. Or in this case, the absence of growth, he notes.
“From July to October, private sector weekly hours were unchanged. No growth,” Haulk says. “Any economic growth emanating from the private economy would have to be in the form of productivity gains, which, of late, have been miniscule.”
Over the past 12 months, private sector hours grew at a very sluggish 1.3 percent. And the think tank president says virtually all of that is accounted for by the 2 percent increase in hours worked in private services.
“Note that private services productivity gains are notoriously weak,” Haulk reminded. “Unfortunately the Labor Department does not track hours worked by government employees -- which in itself is very interesting.”
As for those “best pay raises in seven years,” The Wall Street Journal’s Paul Vigna put those in sobering perspective as well, noting that only “a small sliver of the workforce saw those large wage gains.”
“For the vast majority of American workers, wage growth is still anemic, barely outrunning official measures of inflation, which was 1.5 percent in September, according to the most recent CPI (Consumer Price Index) report, Vigna says.
Haulk says a big part of the lack of growth in aggregate hours worked can be found in the manufacturing sector, which remains 11 percent below the recession levels of 2006. There has been no growth in manufacturing hours over the last year or over the last three months since July, Haulk says.
“Indeed, in both cases, hours are down slightly,” he notes. “The economy is going nowhere fast with these numbers -- a disturbing legacy of failed
fiscal, regulatory and monetary policy over a long period.”