Study: Labor market remains solid
An analysis of 2019 jobs numbers found solid job growth, though with some areas for improvement.
The Economic Policy Institute analyzes key data from monthly Employment Situation reports generated by the Bureau of Labor Statistics. Among its recent findings is that the average number of jobs created each month throughout 2019 was slightly lower when compared to 2018. Likewise, some of the gains involving wage growth in 2018 were erased in 2019.
“Last year was a little softer than 2018,” says Elise Gould, senior economist at EPI. She explains that an average of 176,000 jobs was created each month in 2019, compared to 223,000 jobs in 2018. “But that still far exceeds how many jobs you need to create just to keep up with population growth.”
She says the creation of just 100,000 jobs each month will pull people from the sidelines back into the labor market, such as those who left to raise a family or care for aging parents.
Some of them are women who barely comprise over half of payroll employment. The last time this occurred was back in 2010, after the recession hit and many male-dominated professions in manufacturing and construction jobs were lost.
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Gould says these numbers point to a “solid economy” that has more room for market growth.
However, a stronger economy would support faster wage growth.
“Wage growth was picking up in 2018 over what we saw in 2016 or 2017,” she says, explaining that the rate of wage growth, not wages themselves, is falling. “Wages are not rising as fast as they should or aren’t as strong as you would suspect in an economy that’s at 3.5% unemployment.”
Gould suspects one of the reasons for the decline may be that workers accept the job being offered, believing they lack the skills or leverage to negotiate raises or higher pay. Another is that more employees are signing noncompete clauses and don’t have as many options securing high-paying jobs outside their current place of employment.
The last high point for wage increases—3.4%—was back in February 2019. However, she says, that rate began decelerating throughout the year to 2.9% in December.
According to Gould, wage growth is the No. 1 indicator that HR professionals need to monitor. As long as policy-makers continue to let the economy recover, she believes there will be continued job growth, which in turn, will lead to stronger wage growth.
Meanwhile, the economy continues to “move along,” says Gould. “Employers will have to work harder to attract and retain the workers they want and might want to spend more time investing in the workforce they already have. Employees will find they have more options elsewhere.”