This morning’s jobs report shows that the economy added 156,000 jobs in December 2016. The December report lets us look at 2016 as a whole. Including December, payroll employment averaged 180,000 a month in 2016, which is lower than the average in 2015 (229,000) but still solid. At this pace of growth, we can expect to continue to see improvements in the labor market over the next couple of years as we approach full employment. That’s good for working people who have been waiting years for decent raises and others who have been trying to get better jobs.
Today’s numbers also give us an opportunity to compare how the economy is treating Americans today versus in December 2007, when the recession began. Unemployment peaked at 10.0 percent during the recession, and at 4.7 percent it is now below where it was before the recession began (5.0 percent). Still, there are many signs that the economy has yet to fully recover. The underemployment rate—which adds in workers who are part-time for economic reasons and those marginally attached—still hasn’t reached its pre-recession level. That leaves a lot of workers sitting on the sidelines and underutilized. Two other important indicators—prime-age employment-to-population ratio and nominal wage growth—are still far lower than would be expected in a stronger economy. Year over year nominal hourly wages grew at 2.9 percent in December, the fastest rate of growth so far in the recovery. While the pace of wage growth has picked up this year as the economy strengthens, it is still below levels consistent with the Fed’s target inflation rate and trend productivity growth.
All told, it’s clear that the next president is inheriting an economy much stronger than it was at the start of the previous administration—but there is still more work to do. Not only would cuts to social safety net programs hurt the people who rely on them to make ends meet to put a roof over their heads, to put food on the table, and get the health care they need, we’ve also seen austerity at all levels of government put a drag on the economy. Working families need good jobs, decent wages, and reliable benefits—which means we need policymakers to make it a priority to return the country to full employment. To improve living standards to the vast majority Americans, policymakers need to strengthen the safety net, bolster labor standards, forgo austerity, and ensure that interest rates stay low so that the growing economy reaches all.