November 09, 2014
November 7, 2014 (Jobs Byte)
by Dean Baker
The unemployment rate edged down further to 5.8 percent in October as employment increased by 683,000 in the household survey. As a result, the employment-to-population increased by 0.2 percentage points in October to 59.2 percent. This is a full percentage point above the ratio of a year ago, although the EPOP is still down by more than 4.0 percentage points from its pre-recession peak. The rise in employment was matched by a 214,000 increase in jobs in the establishment survey. This rise, coupled with upward revisions of 31,000 to the prior two months data brought average growth over the last three months to 224,000.
The biggest job gainers in the establishment survey were restaurants, which added 42,000 jobs; retail, with 27,000 jobs; health care, with 24,500 jobs; and employment services, which added 20,400. Health care has added an average of 28,000 over the last three months, which is up from its average of 21,000 over the last year. In addition to the strong job growth, average weekly hours edged up to 34.6, the highest level since May of 2008.
By demographic group, the biggest recent gains have been by Hispanics. Their EPOP rose by 0.4 percentage points to 61.8 percent, while their unemployment rate edged down by 0.1 percentage points to 6.8 percent. The EPOP for Hispanics is 2.2 percentage points above its year-ago level, while the unemployment rate is down by 2.2 percentage points.
By education, it appears the least educated are seeing a disproportionate share of employment gains. The EPOP for workers without high school degrees is up by 1.7 percentage points from its year-ago level, while the EPOP for college grads has risen by just 0.1 percentage points. The unemployment rate for workers without high school degrees has fallen 2.9 percentage points over the last year, although it is still 7.9 percent.
By age, young people were the big employment gainers in October, with teen employment jumping by 266,000 (5.9 percent) and employment for people between the ages of 20-24 rising 262,000 (1.9 percent). These data are erratic and likely to be in large part reversed, but are still striking.
There was also a further decline in involuntary part-time employment, with the number dropping 67,000 from the September level. It is now almost 1 million below the year-ago level.
By contrast, voluntary part-time employment is continuing to rise. It increased by 152,000 and now stands 880,000 above its year-ago level. The rise in voluntary part-time employment is likely attributable in part to the Affordable Care Act as workers are now able to get insurance through Medicaid or the exchanges, whereas previously they needed to work a full-time job.
In this same vein, the number of self-employed jumped by 250,000 in October, although self-employment has not generally been running above year-ago levels. There was an extraordinary jump of 663,000 multiple job holders. This 9.3 percent rise could be a fluke, but it may also be linked to services like Uber and Task Rabbit.
One discouraging item in the survey was a drop in the share of unemployment due to people who voluntarily quit their jobs to 8.7 percent. This is 3 percentage points below pre-recession levels.
There continues to be little sign of accelerating wage growth. The average hourly wage grew at an annual rate of 2.0 percent over the last three months compared to the prior three, almost exactly the same as the rate of increase over the last year.
Contrary to what is often claimed, it is interesting to note that evidence of labor shortages, as measured by job openings, is showing up mostly in the least-skilled sectors of the economy. Both retail and restaurants have higher job opening rates than before the downturn. Professional and business services, which includes highly skilled sectors, also has a higher rate, but this is likely driven by the temp sector. State and local governments do seem to be having more trouble getting workers, which may be due to pay and benefit cuts.
Overall this report suggests that the labor market continues to improve at modest pace. It will take at least three more years at this pace of job growth to return to pre-recession employment rates.
