We’ve gotten so used to genuinely great jobs reports that it can be hard to remember what just a pretty good one is like. Well, at least until now.
That’s because the November jobs numbers were, depending on your point of view, either the very definition of solidly unspectacular or unspectacularly solid: The economy added a decent 155,000 jobs, wages were up a decent 3.1 percent the past year, and unemployment remained at an almost 50-year low of 3.7 percent.
We can certainly do a whole lot worse. At the same time, though, it is true that we can and have done better recently. The 155,000 jobs we added in November, after all, were a good bit fewer than the 210,000 we’d averaged in the three months before. But there are a couple of reasons you shouldn’t worry too much about that. The first is that it’s far too soon to say whether job growth really did slow down last month, and if it did, whether it will continue. These numbers, you see, come with such a big margin of error that you never want to try to read too much into any single jobs report. Maybe this will get revised up, or maybe it won’t, but it’ll still just be a blip on our way back to our previous trend. We won’t know about the past until the future.
The second is that, as most of the people who want a job get one, we would expect job growth to slow down anyway. The tricky thing here is that there’s no way to say for sure when that will happen. A lot of economists thought it would when the unemployment rate was first 5, then 4 and a half, and finally 4 percent, but job growth kept chugging along at pretty much the same pace that whole time. The fact that wage growth has now started to pick up, which you would expect to happen when employers are having to fight over a shrinking pool of would-be workers, tells us that we might be there soon — but only might.
Indeed, the economy still might have a little 200,000 jobs-a-month growth left in it, since even now the labor market seems to have more slack left in it than you’d think there would be with just 3.7 percent unemployment. For one, the number of people who want full-time jobs but can only find part-time work actually increased last month — that’s why the broader unemployment rate increased from 7.4 to 7.6 percent — and isn’t down very much in the last year either. And for another, the share of 25- to 54-year-olds who you’d think would be in the prime of their working years who are in fact doing so isn’t even back to where it was before the housing bubble burst, let alone to the record it set before the tech bubble did.
All of which is to say that we don’t know when the economy will stop adding 200,000 jobs a month, but it will hardly be the end of the world — or the recovery — when it does, and starts creating 150,000 jobs a month instead. That kind of slowdown is what is supposed to happen when unemployment gets this low, but it’s still fast enough to keep pushing joblessness even lower.
The challenge for the Federal Reserve is figuring out whether this means it needs to keep tapping on the brakes, or can afford to just let the car that is our economy coast for a while. The stakes couldn’t be higher for working-class Americans in particular. Why is that? Well, a tight labor market is the best social program there is for them. As Indeed.com’s Martha Gimbel points out, it’s low-income workers who have been getting the biggest raises this past year. Which is why keeping the recovery going as long as we can is so important.
This is a case where pretty good would be plenty good enough — if, that is, the Fed lets it.