It seems American businesses finished 2015 on a bit of a hiring spree. U.S. employers added 292,000 jobs to their payrolls in December, the Department of Labor announced Friday, capping off a strong winter and solid overall year for the labor market. With its most recent revisions, the economy added an average of 284,000 jobs per month during the fourth quarter, and 221,000 per month for all of 2015. That’s not quite as brisk as 2014’s average of 260,000. But ultimately the U.S. has managed to keep adding jobs at a healthy pace for two straight years, while reaching 5 percent unemployment. This is good.
OK. So there’s the happy news. Less wonderful: Labor force participation is still stuck at lows previously not seen in decades and barely moved while all this hiring was going on in the winter. Meanwhile, the number of long-term unemployed hasn’t really budged since June. So, the job market still has yet to overcome some lingering weakness.
And then there’s the issue of earnings. The pace of wage growth picked up toward the end 2015, but a lot of people are still disappointed by the fact that hourly pay only rose by 2.5 percent over the year, suggesting it’s still a sign of slack in the labor market. I’m not so sure it is. In ordinary circumstances, 2.5 percent growth would be uninspiring. But you have to remember inflation has been incredibly low. And the consumer price index is up just 0.5 percent for the year, which means workers are seeing a real boost to their pay. It also might mean that there’s less pressure on employers to raise wages to keep pace with the standard of living. My podcast-mate Felix Salmon points out that core CPI—which is to say, the inflation rate minus food and energy—was actually up a full 2 percent this year. But given that things like gas prices are pretty important to how businesses and families make decisions, I’m not sure how relevant that is. To me at least, the whole issue still seems a little murky.
Anyway, on we go to 2016. Keep up the pace, America.