PI Original Ellyn Fortino Tuesday December 9th, 2014, 1:37pm

Experts: Bright Spots In 'Solid' November Jobs Report, But Economy Far From Full Recovery

Despite the rosy numbers reported in last week's November jobs report, which showed U.S. employers added 321,000 positions last month and average hourly wages went up slightly, experts say the economic recovery still has a long way to go. Progress Illinois provides reaction from economists and labor experts on last month's job and employment figures.

Despite the rosy numbers reported in last week's November jobs report, which showed U.S. employers added 321,000 positions last month and average hourly wages went up slightly, experts say the economic recovery still has a long way to go.

"This is welcome news, however, it's important to put these numbers in context," Elise Gould, senior economist at the Economic Policy Institute (EPI), said in a statement. "At this rate, we won't return to pre-recession labor market health until October 2016--nearly nine years since the recession began."

The 321,000 positions added in November far exceeded expectations and represent the largest monthly job growth in nearly three years.

And although the November jobs report could turn out to be an outlier, Chad Stone, chief economist at the Center on Budget and Policy Priorities (CBPP), explained in a statement that it does represent the "57th straight month of private-sector job creation, with payrolls growing by 10.9 million jobs (a pace of 192,000 jobs a month) since February 2010; total nonfarm employment (private plus government jobs) has grown by 10.4 million jobs over the same period, or 182,000 a month."

Business establishment survey data released Friday by the Bureau of Labor Statistics showed 50,000 new retail jobs were created in November, up from an average monthly increase of 20,000 positions over the prior 12 months. Many retail firms boosted hiring in preparation for "what's expected to be the best holiday shopping season since the recession," reported MarketWatch. Professional and business service jobs also ticked up by 86,000 last month, and manufacturers created 28,000 new positions, among other gains.

Michael Miller, associate professor of economics at DePaul University's Driehaus College of Business, called November's job growth "excellent," noting that the positions added "were decent jobs."

"This is exactly what the country needs," he said, referring to job creation. "The more the better ... I'm not sure where you can put a negative on this at all, and it's really good to see."

Susan Hurley with Chicago Jobs with Justice said she's encouraged that recent job reports have been getting "remarkably better."

"We're talking a couple hundred thousand jobs created every month," she said. "That's very positive."

Still, not enough manufacturing jobs in particular are being added "to replace the ones that were lost, both in our most recent recession and over the last 20, 30 years," she noted. "The manufacturing sector is still much weaker than it should be and requires real investments to help give it the start that it needs."

But not all employment figures released last week were dazzling. The Bureau of Labor Statistics' household survey, which is separate from the less volatile establishment survey, showed the number of employed Americans inched up by only 4,000 in November. Employment, however, rose by 683,000 in October, according to household survey data from that month.

Additionally, November's participation rate among the nation's workforce, which expanded by 119,000 last month, remained unchanged from October at 62.8 percent.

"The sharp decline in labor force participation during the recovery appears over, but prior to recent years, the labor force participation rate hasn't been this low since the 1970s," Stone said. "November's rate remains among the lowest since 1978."

Unemployment Rate

The nation's jobless rate, meanwhile, stayed fixed in November at a six-year low of 5.8 percent. There were 9.1 million unemployed people last month, a 115,000 increase from October, according to the household survey. The number of long-term unemployed individuals, or those who have been without a job for at least 27 weeks, remained about the same at 2.8 million last month.

"This is still alarming that we have that many people, in the sense, on the sideline," Miller said of the long-term unemployment figure. "One thing that is very important for the potential growth of the economy going forward is to have people in the labor force, willing and able to work and so forth. Any time you have this many talented people on the sidelines for this long of a period of time ... this is not a good outcome."

Among racial groups, African Americans had the highest November unemployment rate at 11.1 percent, followed by Hispanics at 6.6 percent and whites at 4.9 percent. The "not seasonally adjusted" unemployment rate among Asians was 4.8 percent, according to the government report.

At the local level, higher unemployment rates among African Americans and Latinos in particular have "long been the case in a place like Chicago," Hurley noted.

"There's concentrated areas of poverty and unemployment in our city," she said. "Again, that's why you need the political will and some decision making about making strategic investments to restart and rebuild manufacturing in areas that need high-quality, stable employment, and people need to be trained to fill those jobs."

Last month's jobless rate was 5.4 percent among adult men and 5.3 percent among adult women, according to the household survey. Among people 25 and older, the unemployment rate was 8.5 percent for those without a high school diploma, 5.6 percent for high school graduates with no college degree, 4.9 percent for those with some college or associate degree and 3.2 percent for those with at least a bachelor's degree.

The combined rate of unemployment and underemployment ticked down from 11.5 percent to 11.4 percent in November, representing about 18 million people who were unemployed or underemployed last month.

"That's well down from its all-time high of 17.2 percent in April 2010 (in data that go back to 1994) but still 2.6 percentage points higher than at the start of the recession," Stone said of the combined rate.

Miller said underemployment is good in the sense that "going forward there's not going to be a shortage" of workers.

"As soon as corporations and small businesses and new start-ups need people, they're going to be there," he said. "It does show that when it comes time to really grow faster, we have the potential to do so."

How Are Younger People Faring?

Last month's unemployment rate was 17.7 percent among teenagers aged 16 to 19, the household survey showed.

Generation Opportunity, a right-leaning youth advocacy group that is heavily bankrolled by the billionaire brothers Charles and David Koch, issued its own jobs report specific to millennials last week, reporting that the November non-seasonally adjusted unemployment rate among 18- to 29-year-olds was 9 percent.

The Bureau of Labor Statistics did not put out a November unemployment figure specific to those in the 18 to 29 age range.

"I'm not sure where they would get be getting (that) data," Miller said of Generation Opportunity's finding. "Most of the economists prefer the smoothing that comes out of seasonal adjustment. It gives you a better understanding of the underlying trend in the labor behavior. So looking at non-seasonal to begin with, I wonder if (Generation Opportunity) went looking for a number that would tell the story they want to tell. But I've never seen that particular [unemployment] number -- the 18 to 29."

The conservative group also said the "effective," non-seasonally adjusted unemployment rate last month among those aged 18 to 29 was 14.5 percent after adjusting for "labor force participation by including those who have given up looking for work."

"I understand what they're doing there," Miller said. "They picked an arbitrary date to say if the participation rate remained the same, this is what the unemployment rate would have been. The only problem with that particular method is it assumes that every single person who would have then been added into the labor force, to show that the labor force should have been larger, they're assuming that person did not get a job ... I tend to be a conservative, I tend to be on the right, and that is not a method that you want to use. That's a mistake ... I don't put much faith in what they're trying to do there."

In terms of how younger people are faring compared to previous generations, new figures from the U.S. Census Bureau did show that today's 18- to 34-year-olds are "less likely to be employed and more likely to live in poverty than their counterparts were in 1980."

People aged 18 to 34 are better educated today than their parents' generation, but their annual median earnings are $2,000 less than what young adults made in 1980, according to the Census Bureau.

Wages

Average hourly wages, meanwhile, did increase by 9 cents in November to $24.66, bringing them 2.1 percent higher than 12 months ago. However, EPI's Gould said November's wage growth is "about on pace with what we've seen the last five years" and an indication that "the labor market is still far from healthy, and that Americans are not reaping the full benefits of the growing economy."

"This lackluster wage growth is a clear indicator that there's still considerable slack in the labor market," she added. "In addition to the headline unemployment number, there are millions of workers who left the labor force because job opportunities are too weak, and millions more employed workers who can't change jobs or get the hours they need, and who haven't seen a pay increase after years of hard work. It's clear that the Federal Reserve should not do anything to slow the economy until nominal wage growth picks up significantly."

Hurley, who noted that November's 9-cent increase "isn't going to go very far in driving a consumer economy," highlighted the important role organized labor can play in terms of boosting wages for workers.

"The real issue is ... if you have job creation, but you don't have workers that are in unions in large numbers, they lack the ability to make sure that they are getting a piece of the wealth that they create," she said. "Without that leverage, and without that organization, it doesn't happen. The trend lines are clear. The decline in union membership tracks with income inequality. This is not a new revelation. Until we figure out how to get workers organizing, achieving some density in industries, we're not going to see workers taking home the wages they deserve proportionate to the wealth they are creating."

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