The last time the U.S. unemployment rate was this low, Peter, Paul and Mary’s “Leaving on a Jet Plane” was the number one song, “Hello Dolly” was the big holiday movie hit and war continued to rage in Vietnam. In December 1969, the unemployment rate was 3.7 percent and not until this September, has it been as low since.
The government reported that the economy added 134,000 jobs in September, below the expectation for 180-190,000. However, the previous two months were revised higher by a combined 87,000, which put average monthly job growth at 208,000 in 2018, a solid pace this far into the expansion. Wages were up 2.8 percent from a year ago, but as noted last week, companies are boosting both pay and benefits to attract and retain workers, which is why economist Joel Naroff believes that, “this number is largely meaningless” and that “overall labor cost increases are accelerating. The standard measures just don’t reflect those increases well if at all.”
Statistics or words like “median” or “average” is just a quick way to describe labor market conditions. Of course, job creation and pay increases vary widely among industries. The Conference Board reported that there are acute shortages of many entry-level positions in various industries, which is just one of the reasons why Amazon announced that it would increase pay to $15/hour. In fact, the lowest paid Americans saw more than 5 percent gains in the second quarter from a year ago, more than the 1.7 percent gain for all workers.
If you’ve been feeling that there are ample opportunities for top-tier and entry level positions, but not so many in the middle, you are right. According to a CareerBuilder projection, released the same day as the employment report, the U.S. should add 8.3 million jobs between 2018 and 2023, a growth rate of more than 5 percent. But just a quarter of those positions (2.1 million) will be in middle wage jobs, while high-wage and low-wage occupations are predicted to add about 3.1 million jobs each.
The fastest growing high-wage jobs include: registered nurses, software developers and post-secondary teachers. The fastest growing middle-wage jobs include: customer-service reps, medical assistants and construction laborers. The fastest growing low-wage jobs are: home health aides, waiters and waitresses and retail salespeople.
BOND BOMB: Investors are starting to focus on the strength of the economy and are betting that not only will the Fed keep hiking short-term interest rates, but that longer-dated 10-year Treasury notes, which move based on supply and demand, will follow suit. Last week, the yields on the 10-year rose to 3.23 percent, the highest level since 2011. Higher yields not only make the cost of mortgages and loans more expensive, they also could induce some stock investors to consider the safety of bonds.