What to watch on Jobs Day: The year in review

The last jobs report for 2016 comes out tomorrow, giving us a chance to step back and put the entire year in context. Because there is always a bit of volatility in the monthly data—especially in the household series—taking a year-long approach allows us to smooth out the bumps and take stock of all the key measures: payroll employment growth, the unemployment rate, the employment-to-population ratio, and nominal wage growth.

This week’s jobs report will also give us a great vantage point to compare December 2016 to December 2007, the last peak year before the Great Recession hit. The unemployment rate continues to fall, and is now far below where it was at its peak (10.0 peak), and even below where it was when the recession began (5.0 percent). The prime-age employment-to-population ratio has been digging its way out of a deep hole over the last several years as well, but progress in this measure has been slower. It is expected to improve as the economy strengthens and more would-be workers return to the labor market and find jobs. Nominal wage growth has also seen some improvements recently, increasing from an average rate of growth of about 2.0 percent in the first few years of the recovery to 2.5 percent average growth over the last year, but it’s still well below levels consistent with the Fed’s target inflation and trend productivity growth.

If December’s numbers are in line with payroll employment growth over the last several months, it will be further evidence that the economy is continuing its march towards full employment. Unfortunately, the return to a full employment economy—one where additional demand in the economy will not create more employment—has been slower than necessary. It faces an uphill battle against a relentless pursuit of austerity at all levels of government and, after rightfully holding off for the most part, Federal Reserve policymakers appear to be putting on the brakes prematurely. For the recovery to truly reach all workers and their families across the country—across race, ethnicity, and levels of education—we need to get back to full employment.

It remains to be seen what, if anything, President-elect Trump will do to strengthen the economy for working people. On net, it could go either way. But all measures, the next president is inheriting an economy far stronger than the last and one that, if left alone, will continue to heal.

  • William Miller

    As EPI has stated, “ … between 2000 and 2007, growing trade deficits in manufactured goods led to the loss of 3.6 million manufacturing jobs in that period.”
    Trade driven by offshoring has caused a large loss in manufacturing jobs. A change in trade policy can return many manufacturing jobs to the USA and stop many additional losses. However, Trump is fighting trade with a weak argument that has no legal justification.

    The right legal argument recognizes that trade policy doesn’t
    account for the theft of public intangible capital (IC) financed with public
    investments. Failed trade policy is based on a paradigm of comparative
    advantage but doesn’t penalize offshoring is advantaged by the theft of public IC. Economics currently ignores the theft of public IC by a company that does offshoring where the IC is a product of public investments in national defense, federal R&D, domestic security, healthcare, education and infrastructure.
    Trade policy currently protects the theft of many types of private IC such as patents but ignores the theft of public IC. The theft of public IC occurs when business operations at a company with jobs and factories are first established in America with public IC created as a result of public investments in IC that get translated into business IC and then moved offshore with proven business capabilities (both tangible and intangible capital) consisting of knowledge, tools, technology and processes. Since 1992, IC has been a larger part of business investments as a part of GDP in America than tangible capital.

    Theft of public IC in offshoring creates a negative
    externality in economics that is similar to pollution of public resources
    penalized in environmental regulation. Trade imbalances don’t measure the flows of IC. Measuring the flows of IC created with public investments is a prerequisite for properly governing offshoring in globalization. The new
    international activity in Integrated Reporting is changing financial reporting
    in business to measure both tangible capital and IC.
    Regulations on offshoring should require repayment of the apportioned public investments that produced the IC used for manufacturing operations at a company with a tax of at least 20% on the value of traded goods sent back to America from offshored factories.

  • surfjac

    The economy will start to turn down with the passage of tax cuts because there will no longer be incentive to create jobs to create income, corporations responsible to shareholders will merely sit back and do nothing. Increased income will show up when you pay out less to the gov’t. who will be getting deeper and deeper into debt from decreased revenue.
    We’ve seen this all before but we had an illegitimate Electoral College vote and the EC didn’t do its job, we’ve seen voter suppression schemes enforced solely on democratic party supporters and we had influence from a foreign government to elect a ‘precedent’. And then, trumpf, the egomaniac, the narcissist, the pussy-grabber, the insulter, the orange fuhrer-wannabe stand up and insult everyone and anyone not him.
    No, the future does not look bright.