The Great Wage Slowdown of the 21st Century

From today’s NYT “UpShot” Blog  by David Leonhardt:

American workers have been receiving meager pay increases for so long now that it’s reasonable to talk in sweeping terms about the trend. It is the great wage slowdown of the 21st century.

The typical American family makes less than the typical family did 15 years ago, a statement that hadn’t previously been true since the Great Depression. Even as the unemployment rate has fallen in the last few years, wage growth has remained mediocre. Last week’s jobs report offered the latest evidence: The jobless rate fell below 6 percent, yet hourly pay has risen just 2 percent over the last year, not much faster than inflation. The combination has puzzled economists and frustrated workers.

Of course, there is a long history of pessimistic predictions about dark new economic eras, and those predictions are generally wrong. But things have been disappointing for long enough now that we should take the pessimistic case seriously. In some fundamental way, the economy seems broken.

I probably don’t need to persuade most readers of this view, so the better way to think about the issue may be to consider the optimistic case. And last week, in his most substantive speech on domestic policy in months, President Obama laid out that case.

Read the entire article here.

A Strong Jobs Report, Charted

From Oct. 3  NYT “TheUpshot” Blog by Neil Irwin:

Remember a month ago, when a crummy August jobs report raised some questions about just how robust the labor market recovery truly was? Never mind.

The September numbers are in, the last to be reported before midterm elections, and they show a job market that is recovering steadily but surely, with the unemployment rate falling below 6 percent for the first time since July 2008. And a solid 248,000 net new jobs were created.

But what are the finer details of the report telling us about the state of the American labor market? While the overall thrust of the report is unquestionably positive, there are some signs of continued weakness buried in the Labor Department numbers that give some reason for pause.

But first, the good news. The 248,000 gain in September payroll employment is part of a bigger trend over the last year, in which payroll gains have taken a decisive shift upward. You can see the shift in the chart of year-over-year job gains.

Over the course of 2014, the trend has risen from around 2.1 million net new jobs a year to 2.6 million as of September, the strongest since April 2006. That may be the single most important number to know to understand what people are talking about when they discuss the acceleration of American job creation.

So what about that unemployment rate? Crossing below the 6 percent threshold to 5.9 percent is surely a talking point we will hear from Democratic candidates in the remaining weeks of this election cycle, and there is no question it is good news.

And many of the internal details that are part of that decline in the unemployment rate are good, too. In September, 232,000 more people reported being employed and 329,000 fewer people reported being unemployed.

But here’s the less rosy sign of the report. The improving job market does not seem to be pulling people who left the labor force over the last few years back into it. In fact the size of the labor force actually ticked down by 97,000 in September, which in and of itself is too small a number in too volatile a series to make much of, but is part of a longer trend of the size of the labor force holding steady rather than increasing.

Read the entire article and see the graphics here.

Job Situation Looks a Little Worse

From the New York Times Economix Blog by Floyd Russell:

Every year at this time, the Labor Department tells us how badly it blew the previous year’s job figures. In each of the last two years, it turned out that job growth was better than previously estimated. But not this year.

The revised numbers come because the government has access to better data, after a long delay. The earlier figures come from a survey of employers, with the numbers adjusted for the government’s estimate of how many jobs were created by new employers, and lost from failing companies that could not, of course, respond to the survey.

The revised figures come from state unemployment insurance premium figures. Employers must pay insurance premiums based on how many employees they have each month, and those numbers are deemed more reliable, even though it takes a long time to compile them.

The new numbers are called the “benchmark revisions,” and they are preliminarily announced in September, although they are not made final until the followed February.

Today’s announcement sounded positive if you did not study it, and some news reports reflected that misreading of it.

“The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2013 total nonfarm employment of 345,000 (0.3 percent),” said the Labor Department’s announcement.

But then it explained that all of that gain, and more, came from changing definitions, not new jobs.

The monthly job figures exclude some workers, like the self-employed, and it counts household workers as self-employed. But now it has revised its definitions, and decided that “establishments that provide nonmedical, home-based services for the elderly and persons with disabilities” should be classified as health care companies. “Many of these establishments were previously classified in the private households industry,” it said.

That added 490,000 workers to the total reported number for last March. On an apples-to-apples basis, however, the result is to reduce job growth in the 12 months through last March by 124,000.

The old numbers indicated that job gains in those 12 months averaged 169,000 per month. This change will shave that figure to 159,000.

It is not a big change, but the direction is not encouraging.

Addendum: The Bureau of Labor Statistics says that it will adjust figures going back at least several years, so that comparisons will not be distorted.