This morning I made the point that the job market had settled into a decent trend, but prematurely, i.e., prior to making up the ground lost, or if you prefer (and I do), prior to achieving full employment.
Here’s a picture of the stability to which I’m referring. It shows the annual percent change in nominal hourly wage growth and payroll employment growth, along with average weekly hours (right axis). They’ve all been flat, with employment growing around 1.7%, wages around 2% (about the rate of overall inflation), and average weekly hours around 34.5.
Of course, labor force participation is significantly down over the last year, from 63.4% in May of 2013 to 62.8% last month, and that’s just a slice of a longer term negative trend. And, on the other hand, as I noted this AM, the yearly growth rate of middle-wage workers has accelerated a bit, from 1.9% a year ago to 2.4% now. So there are bad and good movements afoot, with the bad one–negative LFPR–a very big, bad deal.
But I think it’s fair to say that on some key indicators, despite the very unpleasant Q1 GDP number (-1%), the payroll side of the job market is showing clear stability. That’s better than the alternative for sure, but that growth rate in jobs needs to kick it up if we’re going to find the path to full employment and importantly, reverse the trend in the LFPR.