October Jobs Report: America Still Isn't Working

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11/06/2015

 

Economy: A strong employment report for October hasn't solved a conundrum that has persisted for five years: As jobs are created and the jobless rate falls, the number of Americans in the labor force keeps dropping.

The Labor Department reported Friday that, including revisions from August and September, hiring was up a brisk 283,000 — about double the meager pace of recent months.

Gains were widespread in industries, including business services, health care, retail, food services and even construction, suggesting a housing bounce. Average wages rose 0.35% to $25.20, indicating many workers got raises.

We'd love to see 12 months or more of this. Solid job gains accompanied by wage growth should be the norm in a recovery. But for six years now, progress on the jobs front has been herky-jerky. Every slice of good news seems to be followed by a slip back into the rut of slow growth and wage stagnation.

The government's latest estimate of just 1.5% growth in the third quarter and recent news of manufacturing hitting another skid should temper enthusiasm.

The predominant worry on Wall Street is that good news in the labor market means the Fed will raise interest rates before year-end. The two-year Treasury-bill yield on Friday reached its highest rate in more than five years at 2.3%, suggesting investors believe rates are on the rise.

While a rate hike is probably advisable, someone needs to remind Janet Yellen that more people working doesn't cause inflation.

Labor-force participation, meanwhile, shows no improvement. The number of those over the age of 18 who are working or looking for work remains at a 35-year low, and participation has fallen most for younger workers between 18 and 30.

How can it be that more jobs mean fewer Americans in the jobs market? One answer is that employers are having a devil of a time finding workers with the useful skills that businesses need. That's an indictment of our schools and colleges and the tens of billions of dollars we spend on myriad government-financed job-training programs.

America needs nurses, welders, truck drivers, electricians, mechanics, engineers, carpenters and accountants. Where are they?

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