The first Friday of the month is Jobs Day in the economics world. The prior month’s statistics on jobs creation, unemployment, and wage growth are all released. In this latest report, job creation was up an impressive 200K, the unemployment rate held steady at 4.1% and wages were up by 2.9%, the largest percentage growth in nearly a decade.
The takes are coming in fast and furious
House Ways & Means chairman was quick to credit the tax reform bill passed late last year.
STATEMENT: Chairman @RepKevinBrady on the January 2018 jobs report ⬇️ https://t.co/31bof2p7Ut pic.twitter.com/ZxicGjnymF
— Ways and Means (@WaysandMeansGOP) February 2, 2018
Elise Gould of EPI pointed instead to the wave of minimum wage increases that came through in January.
More hopeful 2.9% nominal wage growth over the year can be in part attributed to minimum wage increases across the country that took effect in January. See @janellecj for the details:https://t.co/rx2eDASSd1 pic.twitter.com/vNcjhpBm9e
— Elise Gould (@eliselgould) February 2, 2018
Danny Blanchflower, correctly in my opinion, noted that all takes such as these were premature.
Wage growth for 80% workers has not changed in last 25readings so this is driven by workers at the top end pulling up the mean so they are wrong https://t.co/dhkRoYAwYW
— Danny Blanchflower (@D_Blanchflower) February 2, 2018
What’s more the superabundance of Job Day takes distracts from a vastly more important set of facts: the ongoing accumulation of evidence that I am always right. To wit, six years ago Tyler Cowen asked
Will Karl Smith have called “The Turn?”
by Tyler Cowen on January 7, 2012 at 12:25 pm in Economics
Karl Smith assembles some green shoots….
Tyler is referring to my call of a bottom to the recession in 2009, that would spread to a sustained general recovery by the summer of 2011.
Ernie Tedeschi posted this morning a demographically-adjusted measure of the employment-population ratio. The employment-population ratio allows see-through declines in the unemployment that come from discouraged workers leaving the workforce and increases in job growth that are driven by changes in the total population. As our society ages, however, the fraction of the population that would naturally be employed falls. Ernie’s demographic adjustment allows us to see through that as well.
What do we find? The collapse in the employment-population ratio halts in 2009, stabilizes through 2010 and then reverse itself into a sustained recovery in the middle of 2011. Ernie’s analysis brings to light this trend which, though still visible if you make the right mental adjustments, is obscured in the original data by the strong demographic headwinds.
His hard work provides yet more evidence that the veracity of my calls is something all Americans, regardless of our political affiliations, can believe in.