November 07, 2021
After a couple of low side surprises, the October job numbers came in somewhat higher than generally expected at 535,000. This went along with large upward revisions of 235,000 to the prior two months’ growth, bringing the three-month average to a very respectable 442,000. The unemployment rate fell to 4.6 percent, a level not reached following the Great Recession until February 2017.
The story looks even better if we just look at the private sector, which added 604,000 jobs in the month. With the revised data, the private sector has now added an average of 491,000 jobs over the last three months.
This raises the obvious question of why the public sector keeps losing jobs? My guess is that we are looking at a supply-side story. Wages have been rising rapidly in the private sector, but not in the public sector. The Employment Cost Index for the third quarter showed private-sector compensation rising 1.4 percent in the quarter. Public sector compensation rose by just 0.8 percent. A restaurant that needs to get more workers can raise pay and offer hiring bonuses, local school boards generally can’t, or at least not without jumping through some bureaucratic hoops.
The average hourly wage for nonsupervisory workers in restaurants rose 12.4 percent over the last year. Imagine what reporting on the economy would look like right now if it were being written by restaurant workers.
Okay, but let’s get to the Biden versus Trump comparison. I know that this comparison is silly since so many factors affect job growth that are beyond the president’s control. But, everyone knows that if the situation were reversed, Donald Trump and his crew would be touting the comparison in every forum they had. I’m doing this for them. As it now stands President Biden has created 5,583,000 jobs in his first nine months in the White House, compared to a loss of 2,876,000 jobs in the four years of Donald Trump’s presidency.
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