Key Takeaways:
- November’s 61.8 percent labor force participation rate is the highest since January 2020
- Unemployment drops to 4.2 percent, lowest in 18 months
- Hourly wages increase 5.8% for the year, but lag behind inflation
By Manuel Gutierrez, Consulting economist to NKBA
November employment news was mixed. The 210,000 jobs added for the month was the lowest total since December of 2020, well below the 590,000 average monthly maintained during the first ten months of this year (Figure 1). November’s number is also 62 percent below October’s new jobs.
Along with the modest number of jobs created, the unemployment rate fell again. November’s rate of 4.2 percent is the lowest since the pandemic began.
November’s 4.2 percent unemployment rate is the lowest since the pandemic began.
The improvement in the unemployment rate can sometimes stem from people leaving the labor force because they gave up looking for a job. This is not the case for the current month, however, given the marked improvement in the percentage of people who are in the force. The participation rate increased to 61.8 percent in November, the highest since January of 2020. There is still some ground to cover to return to pre-pandemic levels. The current labor participation remains more than 1.6 percentage points lower than the 63.4 percent rate in January 2020.
Professional & Business Services, a sector which has contributed to job growth over the last year, added 90,000 jobs in November (Figure 2). The job recovery in this sector, which leads all others, is nearly complete. Currently, jobs are only 0.3 percent below the peak level of 21.5 million in February 2020.
Transportation & Warehousing, part of the much-talked-about supply chain, added 50,000 jobs in November. Employment in this sector still lags by 3.6 percent compared with February 2020. The third highest contributor to November jobs was Manufacturing, which added 30,000 positions.
Although five of the economic sectors shown in Figure 2 had reduced employment, only two suffered a relatively substantial decline. Government employment had the largest drop, with 25,000 fewer workers; and Retail Trade saw a fall-off of 20,000 employees. In the government sector, the reduction was concentrated at the local level, which is the source of most opportunities. In fact, the workforce of local governments, including city and county, accounts for 64 percent of government jobs.
Hourly wages rose 5.8 percent compared with last year, a substantial gain that still lags behind the current inflation rate of 6.2 percent. In other words, workers are losing ground based on wage growth alone. Moreover, wage growth is uneven across industries and economic sectors. Figure 3 displays wage growth for select industries, excluding government workers, many of whom are salaried and not paid on an hourly basis.
Only two of the sectors listed in Figure 3 exceeded the overall growth in wages. They are Transportation & Warehousing and Professional & Business services.
Overall employment has steadily grown since the pandemic low in April 2020. However, it is still 2.2% or 3.5 million short of the 158.7 million individuals who were employed in January of 2020.
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