Key Takeaways from the December Jobs Report

The December jobs report showed unexpectedly robust job growth on Main Street, despite uncertainty on Wall Street.

Last week’s strong ADP jobs report, showing 271,000 job gains, coupled with the incredibly strong BLS report showing a much higher-than-expected 312,000 new jobs, should assuage any fears about a slowdown in the labor market heading into 2019.

Although this may be counterintuitive, even the uptick in the unemployment rate—to 3.9% from 3.7% last month—is encouraging economic news. The increase was not due to a decline in employment but rather due to new workers coming off the sidelines and joining the labor force.

Over the course of 2018, more than 2.6 million Americans have entered or reentered the labor force—the largest increase in a calendar year since 2006. That suggests labor supply has still not been fully tapped.

the labor force participation rate

In addition to being enticed by a larger number and wider variety of available jobs, workers were likely also encouraged to jump back into the job market by rising wages, which grew 3.2% year-over-year in December, continuing a welcome trend of 3%-plus annual growth that began in October.

2018 Closed on a High Note for Women Workers

The female prime-age employment rate grew twice as fast as the male prime-age employment rate in 2018. Between the last quarter of 2017 and the last quarter of 2018, women saw a 1-percentage point gain from 72.2% to 73.2%, while men only saw a 0.5-percentage point gain from 85.8% to 86.3%

There are three likely reasons for this:

  1. Employers are having to offer more attractive working conditions in a tight labor market, like flexible scheduling, t0 make it more attractive for women with children to re-enter the labor force.
  2. Women comprise an ever-larger share of college graduates and professional/graduate degree holders.
  3. There has been a shift towards more balanced gender distributions across a wide range of industries, which is encouraging additional women to enter previously male-dominated fields.

While we’re making progress when it comes to gender parity in the workforce, a forthcoming ZipRecruiter Job Seeker Survey confirms that many women continue to confront gender discrimination and sexual harassment in the workplace.

Structural Unemployment Remains a Concern

There’s no question we have made steady gains over the year in terms of reducing unemployment and underemployment. The number of people working part-time but wanting to work full-time has fallen by 329,000 over the year, and the number of marginally attached workers has fallen by 99,000.

But long-term, structural unemployment remains stubbornly high. The long-term unemployed (people unemployed for 27 weeks or more) comprise 20% of all unemployed people now but were only 5% of the unemployed in 1969, which was the last time unemployment was this low.

One possible explanation for the persistence of this problem has to do with the alarmingly high number of people–particularly men–who are either in prison, or in jail, or have been released but are now struggling to find work. Most prisoners have less education than a high school diploma and the stigma of incarceration remains an additional barrier to employment, even though many ex-offenders perform well in the labor market, once given a chance.

We could see some progress on this front in coming years, however, thanks to the sweeping criminal justice reforms passed with overwhelming bipartisan support in Congress last month. The reforms will expand education and job training for prisoners, which have been shown to increase employment among ex-offenders substantially and to reduce recidivism.

All things considered, the December jobs report is filled with reasons to celebrate. Despite recent market turbulence, the 2019 outlook for workers and employers remains positive.

Written by

Julia Pollak is Chief Economist at ZipRecruiter. She leads ZipRecruiter's economic research team, which provides insights and analysis on current labor market trends and the future of work.

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