State of the Labor Market

December 2019 Jobs Report: Disappointing Wage Growth

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The US economy added 145,000 jobs last month, and the unemployment rate is at 3.5%, unchanged from 3.5% in November.

The labor market heads into 2020 on solid footing, but underwhelming wage growth remains a stubborn fact. 

The truly disappointing wage growth trends of the past few months continued in December. I’ve been consoling myself with the increasing average wage growth for production workers, but that number fell considerably in December. While we shouldn’t overreact to one month of data, the fact that a variety of wage growth metrics show wage growth not picking up with 3.5% unemployment should be a topic of discussion.

This final report of 2019 is symbolic of the data we’ve seen over this decade-long expansion. There continues to be slow but steady job growth and muted wage gains, but workers are still able to enter the labor market from the sidelines. 

There was slower average job growth in 2019 than 2018, which was expected given how hot 2018 was, but it also came in slower than 2017. While job gains have slowed, they are still strong enough to pull more workers into jobs. The share of people in their prime working years with a job increased again in December. With an employment rate still below 2000-era levels, the labor market has more room to run.

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