There were six key issues in the United States employment statistics for third quarter of 2017. The statistics show that monthly job growth was sporadic, the U3 unemployment rate fell to 4.2%, the U6 unemployment rate fell to 8.3% in September 2017, job growth in the manufacturing sector remains sluggish, a large number of the new jobs being created are lower paying jobs than before the 2008 financial crisis, and wage growth continues to be slow.
Over the previous twelve months (3Q of 2016), employers added an average of 185,000 jobs each month, but the actual numbers were sporadic. Historically speaking, these numbers should be enough to push wages upward.
In previous economic recoveries, as more people returned to work, fewer people were available in the job market, which meant employers had to pay higher wages to find employees. This created pressure on employers to raise wages, to either attract the employees they needed for their business, or to prevent their employees from leaving to take higher paying jobs.
However, this recovery isn’t like the previous economic recoveries, and economists are having trouble explaining why wages remain stagnant and inflation remains very low.
In September 2017, the U3 unemployment rate was at its lowest since the recession. U3 measures employed workers and those who have sought employment in the previous five weeks. Job growth in any given month may be slow, but the unemployment rate drops if people stop looking for work. This happened in September when the U3 rate dropped 20 points, which accompanied a loss of 33,000 jobs. Similarly, a month with larger numbers of job growth will be accompanied by a rise in the U3 rate when people who weren’t looking for a job begin looking again and are factored into the statistics.
This data has led more experts to use the U6 unemployment, which is a broader look at employment, and this index counts part time workers who would prefer to work full time as unemployed. The U6 has fallen steadily, which is a positive indicator for the economy overall. However, many of the new jobs being created are part time or lower paying, which explains why it seems like the economy is still in a recession.
Of the top thirty fastest growing occupations (as measured by the Bureau of Labor Statistics), seventeen had a median annual wage of less than $35,000 and just eight were over $50,000. Just one had a median average wage of $100,000.
Experts say that part of the problem with wages in the US is that many available jobs are unfilled because they require specific skills and experience. Further, the jobs that many Americans are qualified for, such as manufacturing jobs, have been sent offshore or eliminated because of automation.
Ultimately, job growth is a major driver of business growth, which in turn drives the use of office, retail and industrial space. Additionally, job growth is a driver of residential real estate as well, and if the problems related to job growth in the United States were solved, the real estate market would grow, too.