A Positive January For Jobs Growth And Wages

The first jobs report for 2018 beat expectation slightly, but the most positive signs came in the underlying data on wages.

Heading into today’s release of the first Jobs Report of the new year, expectations were for a relatively modest increase of about 170,000 new jobs and a stable topline unemployment rate, not exactly a home run but not all that bad either. Much of the month saw cold weather throughout a significant part of the country, and this typically leads to a slowdown in economic activity to at least some respect. Additionally, as I noted in my post about the December report, the jobs market seems to be at the point where expecting massive increases in job creation are probably out of the question. Instead, we’re likely to see modest but healthy jobs growth, but not anything spectacular. In any case, as it turns out the jobs market did slightly better than expected last month, but again not numbers that are overly impressive:

In January, the unemployment rate was 4.1 percent for the fourth consecutive month. The number of unemployed persons, at 6.7 million, changed little over the month. (See table A-1. For information about annual population adjustments to the household survey estimates, see the note at the end of this news release and tables B and C.)

Among the major worker groups, the unemployment rate for Blacks increased to 7.7 percent in January, and the rate for Whites edged down to 3.5 percent. The jobless rates for adult men (3.9 percent), adult women (3.6 percent), teenagers (13.9 percent), Asians (3.0 percent), and Hispanics (5.0 percent) showed little change. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million in January and accounted for 21.5 percent of the unemployed. (See table A-12.)

The civilian labor force and total employment, as measured by the household survey, changed little in January (after accounting for the annual adjustments to the population controls). The labor force participation rate was 62.7 percent for the fourth consecutive month and the employment-population ratio was 60.1 percent for the third month in a row. (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 5.0 million in January. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

In January, 1.7 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a
job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.


Total nonfarm payroll employment rose by 200,000 in January. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. (See table B-1. For information about the annual benchmark process, see the note and table A.)

Construction added 36,000 jobs in January, with most of the increase occurring among specialty trade contractors (+26,000). Employment in residential building construction continued to trend up over the month (+5,000). Over the year, construction employment has increased by 226,000.

Employment in food services and drinking places continued to trend up in January (+31,000). The industry has added 255,000 jobs over the past 12 months.

Employment in health care continued to trend up in January (+21,000), with a gain of 13,000 in hospitals. In 2017, health care added an average of 24,000 jobs per month.

In January, employment in manufacturing remained on an upward trend (+15,000). Durable goods industries added 18,000 jobs. Manufacturing has added 186,000 jobs over the past 12 months.

Employment in other major industries, including mining, wholesale trade, retail trade, transportation and warehousing, information, financial activities, professional and business services, and government, changed little over the month.

In addition to the numbers above, the Bureau of Labor Statistics reported that total nonfarm payroll employment for November was revised downward from +252,000 to +216,000 and that the number for December was revised upward from +148,000 to +160,000. This represents a net downward revision for the two months combined of -24,000 jobs. Combined with this month’s jobs numbers, this puts the average jobs growth for the past three months at +192,000 net jobs created per month, an improvement from where we stood a month ago but still not entirely impressive. For all of 2017, we now have a total of +1, 905,000 net jobs created for a monthly average of +158,750 (rounded) net jobs created per month. This is lower than the average for the year we saw last month thanks to the net downward revisions for November and December. As with last month’s numbers,  this number is most certainly not one that indicates an imminent massive increase in hiring by employers.

During his campaign for President, Donald Trump promised to create 25,000,000 jobs during his Presidency. That would require the creation of 3,125,000 per year over an eight-year term for an average of 261,000 new jobs per month. Over a four-year term that would require 6,250,000 per year, for an average of 521,000 new jobs per month. At the current three-month average, it would take just under 11 years to get to Trump’s goal. At the current average for 2017 pending any final revisions for December that we might see next month, it would also take over 13 years to reach that goal. These estimates assume both relatively steady job growth and no recessions in the intervening period. It’s also worth noting that job growth for the first year of Donald Trump’s Presidency was slower than it was during the final year of Barack Obama’s Presidency and that average jobs growth for 2017 was lower than it has been since 2010 when the economy was still shaking off the impact of the Great Recession. The final numbers for 2017 won’t be clear until we get the final revision for December in March, but at least for now it’s clear that the Trump Presidency hasn’t changed the jobs market all that significantly.

Looking deeper into the numbers, the average workweek across the board was declined by two-tenths of an hour to 34.3 hours while average hourly earnings rose 9 cents to $26.74. Over the year, average hourly earnings have risen by 75 cents or 2.9%. This last number is perhaps the best news in this month’s report, and potentially a sign that the jobs market is becoming competitive enough that employers are finding it necessary to increase wages to retain or attract workers. Additionally, while the topline U-3 unemployment rate was unchanged from last month, the long-term unemployment/underemployment number, meanwhile, increased slightly and both the labor force participation rate and employment/population ratio remained relatively unchanged for the month. As has been the case for the better part of the year, the biggest concern in the numbers isn’t the jobs numbers but wage growth, which remains tepid at best but seems to be showing signs of picking up. As noted, this could be a sign of a more competitive jobs market but it could also be a sign that the pool of available workers is not increasing significantly and that employers are finding it necessary to increase wages to retain or attract workers. It will take several more months of data to see if this continues, though

The New York Times analysis emphasizes both January’s relatively strong jobs growth and the encouraging wage numbers:

Strong job growth continued in January. Better yet, that strength may at last be translating into faster pay increases for workers.

Employers added 200,000 jobs in January, a modest uptick from December and the 88th straight month of job growth, the longest such streak on record. The pace has slowed somewhat over the last two years but remains solid.

“We’re feeling pretty good about the start of the year,” said Becky Frankiewicz, president of ManpowerGroup, a staffing firm. “We’re seeing growth across industries.”

The question — the “bazillion-dollar question,” Ms. Frankiewicz said — has long been when strong hiring would translate into strong wage gains for workers. Friday’s report may have begun to provide the answer. Average hourly earnings rose 2.9 percent in January from a year earlier, the fastest growth of the recovery so far.

Lagging pay has been a persistent economic mystery. But many economists expect wage growth to accelerate in 2018, especially if the unemployment rate continues to fall, forcing companies to compete to attract scarce workers.

Economists warned about reading too much into January’s strong wage numbers — several times during the recovery, wage growth has appeared to accelerate, only to fall back to earth. But they said there was little doubt that the latest numbers were an encouraging sign.

“People have been wondering when the wages are going to start to rise in response to this tightness,” said Catherine Barrera, chief economist of the online job site ZipRecruiter. “I think that over the first six months of this year, we’re really going to start to see the wages rise.”

There are also other signs that employers may be loosening their purse strings. A separate report from the Bureau of Labor Statistics this week found that private-sector wages and salaries rose 2.8 percent in the last three months of 2017, compared with a year earlier, the fastest growth since the recession. But other measures have found that pay growth is slowing.

With unemployment low, employers are working harder to find employees. They are becoming more willing to consider candidates with criminal records, for example, or to waive educational requirements. The car retailer AutoNation said this week that it was no longer refusing to hire workers who test positive for marijuana use — a sign of changing legal and societal norms, but also an indication that companies are rethinking hiring practices in a tight labor market.

The Times also takes a look at what this means politically:

In his State of the Union address Tuesday night, President Trump boasted of the strength of the American economy, citing a rebound in the manufacturing sector and a decline in the unemployment rate for African-Americans, which recently hit its lowest level on record.

Most economists contend that Mr. Trump deserves relatively little credit for the strong economy, which predates his election and is partly a result of a global rebound outside his control. But it is true that recent job growth has been concentrated in blue-collar sectors that Mr. Trump has often emphasized. And it is likewise true that the improving labor market is increasingly reaching groups, including African-Americans, that are often at a disadvantage.

That last point is something that Trump himself pointed to as a positive sign for his policies, specifically citing on Twitter the fact that African-American unemployment was at its lowest level in years. Given the fact that the jobs market as a whole is positive, of course, this is not entirely surprising and many critics noted at the time, Trump really doesn’t deserve credit for this development. More importantly, though, today’s report is a good demonstration of the fact that if you live by the talking point, you’re eventually going to die by the talking point when the data turns out a different number. That happened this month when the new jobs report showed that African-American unemployment increased in January, at least temporarily reversing a trend that had been consistent for most of the Obama Administration.

On the whole, this month’s report is relatively good news for the economy and for workers. While we may be reaching the point where jobs growth is going to slow due to the fact that we’re essentially at the point that economists consider “full employment,” the jump in wages is a good sign for those who are emplyed and if it continues it could signal good things ahead for the economy as a whole.

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Doug Mataconis
About Doug Mataconis
Doug Mataconis held a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020. He passed far too young in July 2021.


  1. Daryl's other brother Darryl says:

    18 states raised their minimum wage, effective January 1, so that explains most of the wage increase.
    And while Denture Donnie was bragging about how he has single-handedly lowered African-American unemployment…African-American unemployment actually edged up.
    Still a long way to go to get to the 25M jobs Comb-Over Donnie promised.

  2. TM01 says:

    @Daryl’s other brother Darryl:
    What did you buy with your $2500 in health insurance savings Lightbringer promised?

  3. Daryl's other brother Darryl says:


    What did you buy with your $2500 in health insurance savings Lightbringer promised?

    It went to a new Ducati…150hp, 400 pounds…the power to weight ratio equivalent of a Bugatti Veyron. 0-60 in 2.3 seconds.
    What did you do with yours?

  4. Daryl's other brother Darryl says:

    @Daryl’s other brother Darryl:

    Still a long way to go to get to the 25M jobs Comb-Over Donnie promised.

    That promise, over 8 years, would require ~260,000 jobs per month.
    After one year 2.1M jobs have been created, an average of 176,000 a month with the highest month being 270,000.
    That means to fufill his promise of 25M jobs ~270,000 new jobs a month must now be created.
    In other words the average job creation going forward, for the next seven years, must equal the strongest month last year.
    Good luck and thanks for playing.

  5. the Q says:

    As neolibs keep saying, illegal immigration from Mexico has flat-lined (no net inflow) the last two years in response to the racists and bigots in the GOP who want to build the wall to keep out these phantom aliens.

    And it should be pointed out that illegal labor has helped to wipe out wage increases for the bottom 30% of the working class (since 1983, minus 8%), so it is heartening to see a raise in real wages.

    But this proves the point that cheap, illegal labor does have serious consequences economically to the lower class worker.

    Cesar Chavez saw his UFW undermined and nearly destroyed by illegal farm labor and Chavez was adamant about border control.

    (At this point, no doubt the label of racist is starting to creep into the reader’s minds as anything that goes against the open borders orthodoxy causes neolib’s heads to explode.)

    Empirically then, we see that with zero new Mexican illegal labor the last two years, the wages at the bottom are finally starting to rise as the over supply of labor has slowed as labor demand rises.

    Of course, the neolibs will completely deny that this (zero net illegal crossings from Mexico) has anything to do with wages rising, but common sense and the basic Marshallian supply and demand curve prove otherwise. Same labor supply + more demand = rising wages.

    But there is a much more pernicious effect of this illegal labor and that is the total disenfranchisement of a large percentage of the working class in that illegals can’t vote.

    It is impossible to develop and encourage a class consciousness and widespread worker’s movement when so many of the dispossessed can’t vote their interests. It fragments and divides the proletariat from speaking in solidarity as they seek to challenge the privileged and propertied class.

    This obvious electoral fact is too often glossed over by the neolibs as they label anyone a racist in the Dem party who dares mention the negative effects on the working class by illegal, exploited labor.

    The sad fact is the modern Dem party is really a Republican lite party, controlled by many of the same factions of the unhinged wingnut party (Wall St., big pharma, finance, insurance/HMOs, free traders). Remember, two of the last three Dem POTUS nominees made over $200 million catering to these groups with hardly a ripple of dismay from the party elite.

    I watch MSNBC and can’t tell you the last time they actually did a story on the inheritance tax and the tens of billions in lost revenue this will cause.

    John Stuart Mill and Teddy Roosevelt each gave compelling reasons why such a tax is necessary and why the imposition of this tax should be “established science” , yet the Dems, whose own donors will benefit greatly by this, largely sat mum while this atrocity was included in the tax reform bill.

  6. John430 says:

    Mataconis says: Lagging pay has been a persistent economic mystery It wasn’t a mystery, Sherlock; employers held off virtually all through the Obama administration for fear more taxes and stiffer regulation would be dumped on them. You can’t expand when Obama always held up the other shoe yet to be dropped.

    You want an economic mystery? What happened to all those “shovel-ready” jobs Obama had lined up?

  7. gVOR08 says:

    The way this works is that we have recessions, we recover (slowly if they’e balance sheet recessions, not the usual interest rate recessions), employment improves until we approach “full employment”, job growth slows as we run out of workers, the competition for employees drives up wages, until the Fed decides we have wage inflation and pushes interest rates higher, triggering the next recession. Rinse and repeat. At each step there will be MSM and Financial press headlines as though whatever happened this month is earthshaking, and a new trend that will continue forever. .

    The labor force is about 160 million. Population is growing at, say, 1% per year. So we will get like 1.6 million more workers per year, 13 million over 8 years. The unemployment rate is 4.1%. Do you suppose Trump realizes there aren’t enough potential workers to “create” 25 million new jobs in the U.S., unless he dramatically increases immigration? Or maybe he’s planning on reintroducing child labor.

  8. teve tory says:

    well that’s ominous. DJIA fell 666 points today.


  9. Sleeping Dog says:

    If we want the economy to grow, we need immigration.