The American economy added 292,000 non-farm payroll jobs in December, but wages fell by one cent. That’s still better than projections, which had put job growth closer to 211,000.
America is still in recovery – the news isn’t so good that we could call the economy booming, but it’s encouraging to see predictable and steady growth. Financial services, travel, and predictably, retail, saw strong growth last month. One sector, however, continues to shrink markedly. The mining and logging industries continued their downward slide, losing 8,000 jobs in December, 131,000 over the course of the year. This decrease is in large part driven by oil prices.
Slow wage growth and underemployment are two disturbing trends to keep an eye on. Wage growth was flat or sluggish throughout much of the year, as has been the case since the economic collapse. Outside of the executive level and professional class, wages haven’t kept pace with cost of living increases – which means that even as people turn from discouraged to seeking, from underemployed to fully employed, many still struggle to make ends meet. That slow wage growth is in part caused by underemployment – slack in the labour market making it easy to keep wages low.
An analysis of long-term changes affecting the labor market released this week by the Federal Reserve Bank of St. Louis focused on how automation and offshoring were continuing to reduce the number of middle-skill jobs, like those in manufacturing and production. One result is a labor market that increasingly resembles a barbell, with jobs concentrated at the high- and low-skill ends of the spectrum.“The picture is clear: Employment in nonroutine occupations — both cognitive and manual — has been increasing steadily for several decades,” the report concluded. “Employment in routine occupations, however, has been mostly stagnant.”
The relationship between wage growth and labour market slack is one to watch in 2016, as the country continues to add jobs but at the same time, contend with larger economic trends driving a fundamental transformation of the US economy.