This morning’s jobs report from the Bureau of Labor Statistics showed that the economy added 211,000 jobs in November—a decent amount, but lower than October’s more solid report, which was revised substantially upward. Average monthly job creation for this year so far is now 210,000, substantially less than the average for 2014 of 260,000. Meanwhile year-over-year wage growth, the most important indicator for the Federal Reserve’s upcoming decision, was 2.3 percent in November—well below a reasonable target.
In two weeks, the Federal Reserve is meeting to discuss raising interest rates above zero for the first time in seven years. While many people are saying this morning’s report clears the way for liftoff, it still is too soon to declare victory in the economy. We won’t be at full employment until we see durable acceleration of wage growth, and only once we have achieved full employment will all workers be able to get the jobs they need and the hours they want, and be better positioned to negotiate for higher pay. Yes, interest rates have been low for a long time, but the Fed should not raise rates simply to scratch a seven year itch.