By Dean Baker
The Bureau of Labor Statistics reported that the economy added 164,000 jobs in July, with the employment-to-population ratio (EPOP) inching up to 60.7 percent, a new high for the recovery. The unemployment rate was unchanged at 3.7 percent. There were downward revisions of 41,000 to the prior two months’ data, bringing the average rate of job growth for the last three months to 140,000.
The big job gainers in July were professional and technical services, which added 30,800 jobs, and health care, which added 30,400 jobs. The former is slightly above the 25,000 average of the last 12 months, while the latter is somewhat below the average of 33,800.
The goods-producing sector fared poorly in July. Mining and logging lost 5,000 jobs. Coal mining was especially hard hit, losing 800 jobs, which is 1.5 percent of employment in the industry. Construction added just 4,000 jobs, well below its average of 16,800 over the last year.
Manufacturing added 16,000 jobs, slightly above its average gain of 13,100, but this was accompanied by a decline of 0.3 hours in the length of the average workweek. The index of aggregate hours in manufacturing is now down by 0.2 percent over the last year. For production workers, it is down by 0.7 percent.
Manufacturing wages have also lagged. The average hourly wage is up just 2.5 percent over the last year. With the decline in hours, the average weekly wage in manufacturing is up just 1.0 percent over the last year.
Restaurants added 15,400 jobs, down from an average of 21,100 over the last year. Hotel employment fell by 5,200, possibly reflecting the drop in foreign tourism. Retail employment fell 3,600, bringing its drop to 59,900 (0.4 percent of total employment) over the last year.
Employment in insurance jumped 11,400 in July, compared to an average of just 2,800 over the last year. There was also an anomalous jump in local education employment of 11,700, likely reflecting changes in the timing of the school year.
Year-over-year wage growth was up slightly at 3.2 percent, but the annualized rate of wage growth comparing the last three months (May, June, July) with prior three months (February, March, April), is just 2.8 percent.
The data in the household survey was generally positive. The small increase in the overall EPOP did not come from prime-age workers (ages 25 to 54), whose EPOP dipped 0.2 percentage points in July. Nonetheless, the EPOPs for both prime-age men and women continue to edge higher. The EPOP for prime-age men is up 0.2 percentage points in the first seven months of 2019, compared with year-round average 2018, and for women, the increase is 0.5 percentage points.
The picture for black men, which had looked bad earlier in the year, seems to have improved in this report. Their unemployment rate remained at a record low 5.8 percent, while their EPOP rose by 1.3 percentage points to a new high for the recovery. The unemployment rate for black teens fell to 17.7 percent, which is a record low but is still regrettably high.
Another positive item was that the duration measures of unemployment all hit new lows for the recovery. The average and median duration of unemployment fell to 19.6 weeks and 8.9 weeks, respectively. The respective drops were 2.6 weeks and 0.7 weeks. The share of long-term unemployed fell by 4.5 percentage points to 19.2 percent.
Less-educated workers continue to be the biggest gainers at this point in the recovery. The unemployment rate for workers with just a high school degree has fallen 0.4 percentage points to 3.6 percent over the last year, while it is unchanged for college grads at 2.2 percent. (It had been under 2.0 percent before the recession.)
Involuntary part-time employment fell by 363,000 and is now well below its prerecession share of employment. By contrast, voluntary part-time employment is lower in the first seven months of 2019 than the year-round average for 2018. Voluntary part-time had jumped in 2014, following the implementation of the ACA, as workers were no longer as dependent on employers for health insurance. However, it is now falling as a share of total employment.
Another discouraging item is a drop of 0.9 percentage points in the share of unemployment due to quits. The current 13.8 percent share is low given the 3.7 percent unemployment rate and suggests workers are reluctant to quit jobs without a new job lined up.
On the whole, this is clearly a positive employment report. However, it does indicate job growth is slowing and it is not clear that wage growth is picking up steam.