The U.S. is on pace for its sharpest year of labor market expansion in 15 years after another month of robust job growth, according to government data released Friday, in the latest reassuring sign about the pace of the economic recovery.
With 214,000 jobs added in October, the unemployment rate ticked down to 5.8 percent, the lowest level in six years, even as more workers entered the job market.
The latest data suggests that the slow march out of the Great Recession is gaining traction and stands in noted contrast to a wave of discontent that helped Republicans sweep a round of midterm elections this week. Though wage growth has been sluggish in recent years, Americans — helped by falling oil prices — are seeing their purchasing power rise while jobs come back.
“We’re seeing solid job growth, and broad-based job growth,” said Department of Labor Secretary Thomas E. Perez said in an interview. “If you’d taken a group of pundits one years ago when the unemployment rate was 7.2, very few would have said it would go to 5.8 percent.”
Hiring in October was slightly below market expectations, but that was offset by revisions of previous data from August and September. The Bureau of Labor Statistics said Friday that job growth in those months was actually 31,000 higher than previously reported. The revisions bump the September total to 256,000 jobs and the August total to 203,000 jobs — meaning the U.S. economy has added at least 200,000 jobs for nine straight months.
The October job growth was most pronounced in the service and retail sectors and in health care. Construction and manufacturing jobs, hard-hit by the financial crisis, are also showing signs of a comeback. The share of working Americans now stands at 59.2 percent, which is the highest level since July 2009. The U.S. economy expanded over the last six months at its sharpest pace since 2003.
Jason Furman, chairman of the White House’s Council of Economic Advisers, described the 56 straight months of job growth as “the longest streak on record” and noted that private employment has grown by 2.6 million over the last year.
Still, the economic improvement hasn’t translated into significant wage growth — a reason one in three Americans still categorizes the economy as “poor,” according to the Pew Research Center. The average American makes three cents per hour more today than last month, and 48 cents an hour more than a year ago. Economists say that, for now, the labor market still has a degree of slack — meaning that job seekers well outnumber actual jobs, and employers don’t need to offer wage increases to get and keep employees.
The Federal Reserve announced last month that it was ending a long-standing bond-buying program, a vote of confidence in the economy. The central bank’s next major decision — whether to raise interest rates — could hinge on how quickly the labor market generates not just jobs, but wage improvements.
One key measuring stick is the underemployment rate, which economists describe as a truer sense of the labor market because it takes into account those who’ve given up looking for work and those who want full-time jobs but can only find part-time. In October, the underemployment rate fell to 11.5 percent, compared with 11.8 percent in September and 13.7 percent a year ago. When the economy is at its best, the underemployment rate lags about four points behind the unemployment rate.
Wage growth has been slowest at the bottom, particularly for part-time workers. And the biggest bump has come not from employers, but from state- and city-level minimum wage legislation. A handful of states, including reliably red-voting Arkansas and Nebraska, this week passed ballots to boost the minimum wage.
“Wages are still growing slower than the Fed would like, slower than everybody in the economy would like,” said Stu Hoffman, chief economist for PNC Financial. “I think it will speed up as this unemployment comes down, but that is one of the most important missing links in the job market.”
Perhaps the most vexing problem is seen in a wave of part-time workers who have swept reluctantly into the workforce as companies, post-recession, cut down on full-time jobs with benefits. Some 27.1 million Americans now hold part-time jobs, compared with 24.8 million a decade ago. Nearly all of that increase has come from workers who say they’re looking for full-time work but can’t find it. Among the part-timers, African-Americans have actually seen their wages drop nearly nine percent since 2009.
“The challenge ahead is the challenge of sharing prosperity,” Perez said. “I speak to a number of people who are appreciative of being employed but frustrated that they haven’t gotten a raise in years. And their frustration is understandable.”
Though some softness remains, the U.S. job market has been one of the few bright spots in a sagging global economy. Janet Yellen, the Federal Reserve chair, said in a speech on Friday that “headwinds” continue to weigh on growth in advanced economies.
“Policymakers face difficult choices as they seek to balance the need for long-term fiscal sustainability with the need to support their economies in the near term,” Yellen said in prepared remarks.