The Unemployment Rate Can Only Go So Low
Only 20,000 jobs added in February, but unemployment is down and wages are up.
The jobs numbers for February came in at a startlingly low number of only 20,000 jobs added, well below the 180,000 jobs many economists had expected. However, the headline employment rate dropped further than anticipated, down to 3.8%, while real unemployment (the U-6 rate) plunged from 8.1% to 7.3%. The really good news is wage numbers. CNBC reports, “Average hourly earnings increased by 3.4 percent on year over year, easily the best of the economic recovery that began nearly 10 years ago. That compares with a 1.5 percent increase in the consumer price index for all urban consumers from January 2018 to January 2019. Economists had been expecting a wage increase of 3.2 percent.” It’s the seventh straight month of wages gains of 3% or higher.
So, what does this all mean? For one thing, it appears that as more and more Americans find gainful employment, the overall number of new jobs being filled will naturally decrease. Second, a lower unemployment rate means that employers will be competing for employees, which in turn drives up wages.
The low jobs-created number is somewhat concerning as it may indicate a slight slowing of economic growth, which Democrats are hoping turns into a recession they will then blame on President Donald Trump. As Mark Alexander wrote in December, “Caught in the Democrats’ political crossfire are tens of millions of American workers and their families whose jobs and income prospects will fall victim to the Demos’ politically induced recession — the direct result of having thrown economic confidence under the bus in order to attack Trump.”
Finally, this is only one month’s numbers, and a seeming anomaly at that. It will be more informative to see where everything stands at the end of the first quarter. But one more thing: The labor force participation rate remained at a five-year high of 63.2%. A lot of Americans are working.
(Updated.)