On January 10, the U.S. Bureau of Labor Statistics (BLS) released the last jobs report of the decade. It showed that the economy has now added jobs for 111 straight months at a rate of about 198K new jobs per month on average over that period.
Job growth was somewhat slower in 2019—176K jobs per month on average—but healthy nevertheless.
Sustained job growth over such a long period has brought the topline unemployment rate down to 3.5%—the lowest rate in 50 years. December 2019 was also the first month in which the so-called U-6 unemployment rate (an expanded definition which includes marginally attached workers and those in part-time jobs because they cannot find full-time work) fell below its 2000-era level.
Two big stories jump out of the report.
1. Women now hold more payroll jobs than men do
The employment-to-population ratio for women, aged 25 to 54, has seen a spectacular increase since 2015. The result is that women now hold more payroll jobs than men for the first time since the Great Recession, when traditionally male-dominated occupations like manufacturing took the hardest hit.
Many simultaneous labor force developments have combined to produce this spike in female employment. First, female-dominated industries, like healthcare and education, have grown rapidly. At the same time, male-dominated industries, like transportation, have welcomed large numbers of women. That is partly because apps like Uber and Lyft allow women to sidestep male-dominated taxi companies, work on more flexible terms, and screen potential customers.
Third, the number of men who are staying home to raise children or look after parents has risen, simultaneously reducing male employment and raising female employment. And fourth, 2019 has been a bad year for male-dominated industries, like manufacturing or oil and gas.
2. The labor market is still not tight
Instead of continuing to rise as it did during 2018, year-over-year wage growth has now slowed from 3.4% in February to 2.9% in December. At the same time, the employment-to-population ratio for Americans in their prime working years (25 to 54) has continued to rise, reaching 80.4% in December.
Both changes suggest that there is still slack in the labor market. In other words, despite low unemployment, many U.S. businesses are finding the quality candidates they need without having to increase pay dramatically because they are considering candidates who have been out of the labor market for a period.
Rising prime-age employment rates reflect new opportunities for stay-at-home parents, semi-retirees, displaced workers, and even ex-offenders who are hoping to return to the workforce. It is also good news for young people starting out their careers. We would need to see three more years of job growth at this pace to reach the peak prime-age employment rates achieved in around 1999/2000. Until then, wage growth may continue to be tepid outside of occupations that require a great deal of education and training.
The labor market is on a sound footing as we head into 2020
After more than nine years of job growth, the labor market has the wind at its back going into 2020, thanks to accommodative monetary policy, a rising stock market, improving economic conditions abroad, and a partial easing of trade tensions. If the service sector holds strong and the production sector recovers from a relatively weak year, we could see even stronger job numbers in 2020.