Critics will point to the relatively low number of jobs added as a sign of future weakening. It’s true that the report showed only 136,000 jobs were gained last month, lower than recent trends. But the underlying employment data suggest this might be as much a result of an extremely tight labor market as a tariff-related slowdown.
All the signs of a tight labor market are present. The share of the population participating in the labor market stayed at a six-year high of 63.2 percent. That’s a half a point higher than a year ago, meaning that more than a million Americans went back to work as a result of the strong economy. The employment-to-population ratio also ticked up to 61 percent from 60.9 percent in August. This means that employment growth is exceeding population growth — exactly what you would expect if the labor market were tightening.
Other data also point to a tight labor force. The number of people working part-time because of slack business conditions dropped by 90,000 last month. If the economy were broadly slowing, that number should rise rather than fall. The rapidly dropping unemployment numbers for people without a high school degree also point to a tight labor market. Employers are usually slower to hire lesser-educated workers because they tend to have fewer skills, but the unemployment rate for high school dropouts decreased by 0.6 points, from 5.4 percent to 4.8 percent, last month. Employers wouldn’t be hiring these people if they didn’t need them.
That’s not to say that every single sector of the economy is growing. Manufacturing employment was very slightly down last month and has not grown all summer. But that’s more a case of foregone growth than decline; there are still more than 100,000 more people employed in manufacturing today than there was a year ago. Meanwhile, agriculture employment is down by nearly 75,000 people from a year ago. This is probably the one area that we can say with certainty has been harmed by Trump’s tariff war with China. It’s not a good time to be an Iowa soybean farmer.
But it is a great time to be a Hispanic laborer. Every major indicator of employment health is positive for the Hispanic community. Labor force participation for the demographic is up by nearly a percentage point from a year ago, and unemployment is down. These factors combined mean that 1 million more Hispanics are working today than was the case one year ago. That is perhaps one reason why Trump started to actively campaign for Hispanic votes before the Ukraine scandal broke, and why his job approval ratings among Hispanics regularly exceeds the share he got of the Hispanic vote four years ago.
Perhaps all of this will come tumbling down in future months as the tariffs kick in and the tax cut’s fiscal stimulus wears off. But so far it looks good on the ground for ordinary Americans. And that can only be a ray of sunshine for the increasingly beleaguered Trump.