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As the US Economy Keeps Growing, Real Wages Keep Rising for Everyone
What happens when an economy keeps expanding year after year — even if industry is growing more concentrated and trade deficits stay big and unions aren’t what they used to be? Well, this is what happens, via the Indeed Hiring Lab:
More people returned to work in 2018. The unemployment rate fell from 4.1% in December 2017 to 3.7% in October 2018 — well below what the Federal Reserve thinks unemployment will be in the long run. A broader measure that includes labor force re-entrants — the ratio of employed people of prime working age (25 to 54) to their population — rose from 79.1% to 79.7%. And the share of workers involuntarily working part-time fell from 3.1% to 2.8%. Even better, the tightening labor market brought rising wage gains in 2018. Wage growth for private-sector workers topped 3% this year and looks to continue gaining next year.
More people returned to work in 2018. The unemployment rate fell from 4.1% in December 2017 to 3.7% in October 2018 — well below what the Federal Reserve thinks unemployment will be in the long run. A broader measure that includes labor force re-entrants — the ratio of employed people of prime working age (25 to 54) to their population — rose from 79.1% to 79.7%. And the share of workers involuntarily working part-time fell from 3.1% to 2.8%. Even better, the tightening labor market brought rising wage gains in 2018. Wage growth for private-sector workers topped 3% this year and looks to continue gaining next year.
Published in EconomicsSecond: the population is aging and the working-age population is growing slowly. Between now and 2030, the prime-working-age population of 25 to 54 year-olds is projected to grow just 0.5% per year. That’s much slower than in the 1970s, 1980s, and 1990s, when working-age population growth averaged 1.8% per year. The economy needs only between 60,000 and 70,000 new jobs a month to keep up with this slowly growing population — way below the 200,000 per month range of recent years. The job market could sustainably grow faster than 60-70,000 per month if baby boomers delay retirement, working-age labor force participation rises, or immigration increases.
Wow that sounds like really good stuff. And, yet, here in my home town in the center of our country, the nations largest plumbing, appliance, and lighting distributor with over 2000 branches nationwide is not only on a hiring freeze, but just two days ago, actually fired a number of people locally. I was shocked. Go figure. It doesn’t much matter how the country is doing if you are one of the few that just lost your job. On the other hand, the best time to lose a job is when so many other opportunities are available.
And still they are voting the Republicans out.
Jim, you’re painting a false picture. Things wouldn’t look so pretty if President Cruz had won in 2016. If the NeverTrumpers had their way America would be yet again trapped in a deflationary growth model under a Republican president. I get that deflationary policies worked wonders under Reagan–that’s because he was fighting inflation. Strong dollar policy? Cheap labor uber ales? Mass immigration?
Perhaps the reason why the economy is doing better now, despite decades of stagnant growth, is that Trump has actually changed policy.
Economies are really complex phenomena but one thing we know is that it is their nature to grow, not smoothly not linearly, but they grow. It takes a lot of special efforts to keep them from growing and one of the political classes primary objectives is to do the things that retard long term growth. Of course all politicians embrace the idea of growth and expanding incomes, but they are always beholden to organized interests and interests organize in order to extract either protections or favors for their members. These things have local short term positive impacts for those who get the things they seek but taken as a whole through time lead to drag on growth. They are both a product and cause of big government, the administrative state, they are why we fight so loudly over politics. In theory we like the creative part of creative destruction but our money and efforts are behind stopping the destructive part but an economy can’t have growth without both. I suspect we’re enjoying a little boom because the Obama Administration was dedicated to doing things that hampered growth and created uncertainty about the future.