Persistently Positive Job Growth Raises Questions
by Cliff Waldman, Chief Economist
Yet again, the labor market is the one strong player in an otherwise lackluster economic expansion. After a slowdown in the latter months of 2016, total net new job growth registered an unexpectedly strong 227,000 in January. With the current unemployment rate at 4.8%, this has provoked debates as to whether we have hit a level below which inflation and other expansion-threatening instabilities begin to appear.
However, the understandable desire to conclude that we are at "full employment" needs to be restrained by the oddities of the current period of economic history. For one thing, while the labor force participation rate did increase slightly in January, it was hardly a significant upside, and participation remains stuck at 40-year lows, a stubborn problem that has been generating significant research.
Second, while the current unemployment rate is certainly low, it is well above the 2.5% unemployment rate for workers with a bachelor’s degree or higher. This suggests a shortage of educated labor, which we can conclude is a likely impediment to job gains in certain manufacturing industries.
Indeed, factory sector job performance has been a disappointment in an otherwise strong jobs picture. After a promising turn that began in 2010, manufacturing has primarily shed jobs since mid-2015.
Both domestic and global forces have been constraining manufacturing employment. Policy and business leaders alike should remain attentive to manufacturing workforce issues. Many segments of the workforce need an uptick in factory sector job performance. Before a full celebration of healthy job growth gets underway, we need to consider the challenges faced by our manufacturing sector.
U.S. Manufacturing Jobs