By Dan Calabrese ——Bio and Archives--September 7, 2018
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The left is in trouble now.
Every month we see job growth near or above 200,000 – which represents a pretty decent margin above the replacement rate of about 140,000 – it becomes harder for the Democrats/media/left to claim the economy isn’t really helping workers. But so far they’ve done their best to at least fall back on the argument that wages aren’t keeping up the actual raw job creation numbers.
The Labor Department’s closely watched employment report published on Friday also showed slack in the jobs market was rapidly diminishing, with a broader measure of unemployment falling to a level not seen since 2001. The report cemented expectations for a third interest rate increase from the Federal Reserve this year when policymakers meet on Sept. 25-26. “The economy is on an adrenalin rush,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Given the amount of fiscal stimulus that the economy is benefiting from, it’s going to take a lot to get it off that high.” Nonfarm payrolls surged by 201,000 jobs last month, boosted by hiring at construction sites, wholesalers and professional and business services, the Labor Department said. There were also gains in transportation and healthcare employment.
Job growth averaged 185,000 per month in the past three months. The economy needs to create 120,000 jobs per month to keep up with growth in the working-age population. Average hourly earnings increased 0.4 percent, or 10 cents in August after rising 0.3 percent in July. That raised the annual increase in wages to 2.9 percent in August, the largest gain since June 2009, from 2.7 percent in July. A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell one-tenth of a percentage point to 7.4 percent, the lowest level since April 2001. The unemployment rate was unchanged at 3.9 percent.Anyone who understands the dynamics of the labor markets knew this was coming eventually. When you have too few jobs and too many workers, wages will stagnate or decline. The situation right now is too many jobs and too few workers, and that situation cannot sustain for long without wages going up. The dynamic may lag for a quarter or two, but eventually companies having trouble finding workers are going to have to raise wages – because they need the labor more than they need the cash. It happened exactly the way many of us said it would, because it cannot happen any other way. I would quibble with one thing in the excerpted report from Reuters, though. The economy is not on an adrenalin rush. The economy is growing because taxes and lower and regulation is lighter, freeing up more capital to be invested in productive endeavors, and eliminating much of the busy work that used to be necessary to pursue said endeavors. When the economy grows briskly, it’s always the productive private sector – not government spending – that fuels it. People who don’t understand that forecast the tax cut would do no good. People who still don’t understand that continue to fail to see what’s going on. Don’t be one of them.
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