Experts Rave Over December Jobs Report
A decline in the unemployment rate and a continued increase in jobs in multiple employment sectors during December brought 2014 to a close on a high note, according to industry experts.
Although nagging questions still exist about job quality and wage levels, last month’s Bureau of Labor Statistics report marked the best year for the U.S. labor market since 1999.
An estimated 252,000 jobs were added to the U.S. workforce in December, according to figures released Friday. The additional jobs drop the unemployment rate to 5.6%, close to what the Federal Reserve considers “zero unemployment” levels of 5.2% to 5.4%.
December’s gain follows a November job growth of some 350,000 positions, for a year-end total of some 2.95 million jobs added in 2014.
The largest gains in December were seen in professional and business services, construction, food service and drinking establishment jobs, health care and manufacturing. Employment declined only in the areas of accounting and bookkeeping services, the report said.
“The focus should be on the fact that the job market continues to heal,” Mark Hamrick, Washington bureau chief for the consumer financial website Bankrate.com, said. “Not that long ago it would have been unfathomable to think about an unemployment rate around 5%, but continued jobs creation at this level should give us reasonable confidence that 2015 growth could continue.”
U.S. jobs growth parallels the country’s economic growth to a certain degree, but it’s not the only indicator, Hamrick said. An equally telling factor is job quality and wage growth, which is still somewhat tenuous.
Positions in bars and restaurants are booming, but the resulting wages are not on par with those of professional positions lost during the recent recession, he added.
Department of Labor Secretary Thomas E. Perez acknowledged the disparity, and continued to push for a federal minimum wage increase to $10.10 per hour from the current rate of $7.25 per hour. Such an increase would raise wages for some 28 million Americans, increasing their economic well-being and buying powering and strengthening the consumer economy.
But some states already have taken action in those areas, Hamrick said.
“Even among states whose political winds have blown in the GOP’s direction, four of five of them have already enacted minimum wage increases,” he said. “In this case, it seems that the states are ahead of the feds.”
The threat of inflation also looms on the horizon, Hamrick said, and the Fed is monitoring the situation closely.
“The Fed has two mandates,” Hamrick said, “to foster growth that will result in maximum employment and to establish stable prices, which they read as inflation at the 2% level. Over time – and that’s the measurement they use – the Fed believes that inflation will return to target levels.”
Sustainability of economic and job growth continues through 2015, but absent a major event or economic downturn, continuation of the current trend seems likely, Hamrick said.
The decline in oil prices has left more money into consumers’ pockets that they don’t have to spend on heating their homes and filling gas their tanks. Uncertainty in the world’s economy, including Greece’s possible exit from the European Union, could cause ripple effects that might have negative impacts on the U.S. economy, including continued jobs growth, he added.
Right now, with apologies to the musician Prince, U.S. consumers are partying like its 1999. Whether than trend remains stable or even escalates throughout 2015, while very possible, is still uncertain, Hamrick said.
“Next year at this time we may be partying like it’s 2014, but if we were drinking champagne last December we might be drinking wine next December,” Hamrick said. “It will be a celebration of a different flavor, and if we have something to celebrate, it likely will have a different flavor to it.”