June 2018 Admin, Healthcare and Transportation Jobs Report

After celebrating it’s 242nd year of independence, the U.S. economy grew by 213,000 non-farm jobs, a full 18,000 jobs above economists’ expectations. The unemployment rate rose 0.2 percent to an even 4 percent. Some link this slight uptick to the 0.2 percent increase in the labor force participation rate, as some 601,000 Americans “got back in the game” and started looking for work. Wage growth remained sluggish and trailed inflation, growing a mere 2.7 percent from June 2017. Jeff Cox of CNBC attributes this minimal wage growth to a decline of 89,000 full-time positions.

The largest job gains were seen in education and health services (54,000), professional and business services (50,000) and manufacturing (36,000). These three sectors account for nearly 65 percent of all June job gains. Conversely, retail lost 22,000 jobs.

Three primary issues raised by this June’s jobs report are the shortage of qualified workers, the lingering specter of a trade war, and the amount of “slack” in the labor market.

From the mailroom to the board room, employers can’t find qualified workers to fill open positions. The New York Times quotes Joe Galvin, chief research officer of Vistage, an association of small-business owners and executives, “There’s more jobs than there are people available for jobs — at every level.” This trend shows no sign of abating. Moody’s Analytics chief economist Mark Zandi told USA Today, “Businesses’ No. 1 problem is finding qualified workers…At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes.”

Caused in large part by last year’s tax cuts and recent regulatory rollback, the current economic boom could be derailed by a trade war. However, these worries have yet to be reflected in hiring trends. Martha Gimbel, director of economic research at Indeed, explains in the Wall Street Journal, “While tariffs may slow down job growth moving forward, there is no sign yet in the June jobs report. With payroll job growth coming in at 213,000 (about typical for this recovery), this recovery continues on its record-breaking pace. We just hit 93 straight months of job growth – a new historical record.”

The amount of slack, “the number of Americans on the sidelines waiting for a good opportunity,” in the labor market is a matter of debate. But the increase in the labor force participation rate point to a healthy amount of slack, especially since the rate is still well below pre-2008 levels, leaving much room for growth.