Keep on working

Some thoughts on last Friday’s BLS employment report, otherwise known as “the good one”:

The employment report is pretty good news indeed, especially as regards job creation in the private sector.  151,000 jobs were created overall (in the private and government sectors combined), about twice as many as market analysts had projected.  The increases in the length of the workweek and in overtime hours are also welcome news, as these are considered leading economic indicators.  (This is because companies often cut the hours of their workers during a recession and extend the hours of their workers in the early stages of a recovery rather than take on the overhead costs of hiring new workers.  As the recovery gains steam, they’ll actually hire new workers.)

Alas, the increase in employment, though much larger than expected, is still not large enough to reduce the unemployment rate, still at 9.6%.  The increase in employment was offset by new entrants into the labor force, not all of whom found work. All of this happened without any big changes in the labor force participation rate or the more comprehensive U-6 unemployment rate, which is still around 17%.

The increase in weekly paychecks is particularly good news, as Chris Isidore of CNN/Money notes.  Isidore points out that the increase comes not so much from higher hourly wages as from longer workweeks.  He mentions that 318,000 fewer workers are involuntarily working part-time instead of full-time jobs, compared with last month, and that is a big positive deal for a lot of people.

However, the increase in average weekly hours is not all that big; 318,000 is not that big a number compared with total employment (131 million).  The 1.8% month-to-month increase in average weekly hours was the largest in 26 years, as Isidore notes, but that too is less of a big deal than it might seem.  It’s an increase from 33.7 hours to 34.3 hours.  If you’re rounding to whole numbers, as I like to do to keep things less “statsy,” you’d miss the increase entirely.

A number worth trumpeting, as Isidore does, is the 3.5% year-to-year increase in average weekly wages, from September 2009 to September 2010. That’s especially good considering that inflation over the same span was about 1%, which means a 2.5% increase in real weekly wages.  A real wage increase of that magnitude was normal once upon a time (1947-72 and the second half of the 1990s), but for most of the past 40 years real wages have grown very slowly or hardly at all.  We’ll take it.

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