The January Jobs Jump
Good news for jobs and even better news for wages as businesses, fueled by tax cuts, compete for workers.
Thirteen months ago, before Donald Trump had taken office, we issued a caveat about headline unemployment: It would be pretty tough for Trump to do better than 4.7% unemployment, which is generally considered to be “full employment.” Over the course of 2017, however, the economy did improve, in large measure due to Trump administration policies. And the job growth trend continued in the first month of 2018. Beating expectations, January saw 200,000 jobs created, while the headline unemployment rate sits at 4.1%, the lowest since December 2000.
The Wall Street Journal reports, “A broader measure of unemployment and underemployment, which includes people working part-time jobs because they can’t find full-time employment, ticked up to 8.2% in January.” That’s exactly what we warned would happen 13 months ago — as more people entered the job market because they were encouraged by the economy, that top-level unemployment number would paradoxically increase. The headline rate doesn’t include those looking for work; the so-called U-6 rate does.
One blemish, Ed Morrissey notes: “The U-3 unemployment rate remained essentially unchanged for the third straight month, but not among African-Americans, where it went from 6.8% to 7.7%, its highest level in a year. Donald Trump had bragged during his State of the Union address on Tuesday night about achieving a record low in this metric; expect to see some focus on this reversal from the media, and especially from members of Congress who were already dismissive of this claim.”
But overall it was a good January report, and it includes a big bright spot: Wages rose at a 2.9% annualized rate and grew at the fastest pace in more than eight years. Some of that may be attributable to minimum wage increases in 18 states effective Jan. 1, but more of it has to do with competition. As more businesses (fueled by new Republican tax cuts) compete for fewer workers by paying higher wages, that trend could get even better. In fact, tax cuts likely saved a lot of jobs by helping companies afford those minimum wage hikes. Meanwhile, the Atlanta Federal Reserve expects GDP growth of 5.4% in the first quarter, and we haven’t seen that since George W. Bush’s early years.