“Worker shortages may become more frequent in the coming year, which means employers could have to give out bigger wage hikes even as hiring cools,” writes Sho Chandra at Bloomberg. “The data underscore a job market that will continue to buoy consumer spending in 2017, with Federal Reserve officials deeming the situation at or close to full employment.”
The PayScale Index, which measures the change in wages for employed U.S. workers, forecasts 3.2 percent growth in pay for Q1 2017.
Where Jobs Are Growing Most
The following industries added jobs last month:
- Healthcare (+43,000 jobs)
- Social assistance (+20,000 jobs)
- Food services and drinking places (+30,000 jobs)
- Transportation and warehousing (+15,000 jobs)
- Financial activities (+13,000 jobs)
- Manufacturing (+17,000 jobs)
Professional and business services also added 15,000 jobs — relatively little in comparison to the industry’s usual monthly total. For example, last month’s report showed gains of 65,000 jobs in that sector.
Other industries added few or no jobs in December, including mining, construction, retail trade, wholesale trade, government, and information.
The Labor Force Participation Rate
“The unemployment rate ticked up slightly to 4.7 percent, driven by a slight increase in the labor force participation rate,” says Harry Holzer, author of Where Are All The Good Jobs Going?, in a statement. “But the latter is the same as a year ago and below most months this past year. The decline in labor force participation among prime-age workers (25-54) over the past 8 years remains a disappointment, despite the broader labor market recovery.”
The mystery of why prime-age workers are leaving the workforce has plagued economists for quite some time. A 2016 White House report, The Long-Term Decline in Prime-Age Male Labor Force Participation, posited several explanations. Among them: declining opportunities for low-skilled workers, and a less supportive labor market in terms of policies that provide job-search assistance and training.
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