The unemployment rate dropped to 5.8 percent in October as 214,000 jobs were added to the economy according to the official jobs report released by the Bureau of Labor Statistics (BLS) today. This is the lowest since July 2008. In addition, the BLS reported that 31,000 more jobs were added in August and September than previously reported. The August numbers were revised up from 180,000 to 203,000, and September was revised from 248,000 to 256,000.
Of the 214,000 jobs added, 209,000 were private sector jobs and 5,000 were in the public sector. Consistent with a four-year trend, the federal government continues to shrink cutting an additional 3,000 jobs. State governments also laid off 3,000 persons. These were offset by increased employment by local governments as federal and state budgets are cut.
This trend of shifting costs to local government leads to more regressive taxation because local governments rely on property and sales taxes whereas states and the federal government generally get revenue from income taxes. This contributes to the disparity of wealth which many economists say is hurting economic growth.
Unemployment continues to hit some groups harder than others. In October, the unemployment rate for whites declined to 4.8 percent whereas for blacks it is 10.9 percent and Hispanics 6.8 percent. In addition, men are faring better than women 5.1 percent to 5.4 percent. The unemployment rate for teenagers is still 18.6 percent. Wages remained stagnant once again.
The number of long-term unemployed (those jobless for 27 weeks or more) remained at 2.9 million. These individuals accounted for 32.0 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.1 million, not fast enough to bring down the unemployment rate faster. The labor force participation rate was little changed at 62.8 percent and has been essentially flat since April. The number of discourage workers who stopped looking for work remained unchanged at 770,000.
Food and drinking places added 42,000 jobs in October, up from the average gain of 26,000 jobs per month over the prior 12 months. This is indicative of stronger consumer confidence as more people have disposable income again. Likewise, retail stores added 27,000 in October in anticipation of a strong holiday season. Within the industry, employment in general merchandise stores increased by 12,000 and automobile dealers hired 4,000 workers. Retail trade has added 249,000 jobs over the past year.
Health care continued to add jobs despite political ads that claimed Obamacare is killing jobs. In October, 25,000 jobs were added, about in line with the prior 12-month average gain of 21,000 jobs per month. Part of this is due to the fact that 10 million persons now have insurance and can afford to go to the doctor.
Employment in professional and business services continued to trend up over the month adding 37,000 jobs. In October, employment continued to trend up in temporary help services. This is often an indicator of future job creation.
Manufacturing continued to add jobs, reversing a decades-long trend of job loss. In October, 15,000 jobs were added including gains in machinery (+5,000), furniture and related products (+4,000), and semiconductors and electronic components (+2,000). Over the year, manufacturing has added 170,000 jobs, largely in durable goods. Employment also continued to trend up in transportation and warehousing which added 13,000 jobs. Construction also continues to rebound adding 12,000 workers. This also debunks claims in political ads.
Despite these strong job numbers and other economic indicators, exit polls showed that voters do not feel the economy is getting better. There are two things to consider. One, over a billion dollars was spent by Republican groups telling voters that the economy stinks. Those ads were persuasive even though the ads are not consistent with facts.
Secondly, exit polls surveyed only those who voted, and those voters were older and more Republican. Not polled were younger and Democratic voters because they did not turn out. Perhaps they were at work.
There continues to be weaknesses in the economy which could be cured by a large investment in improvements to the nation’s crumbling infrastructure. This would add millions of high-paying jobs. Will the new Republican majority finally invest in infrastructure, or will they continue to hold back to give them an issue in 2016? Time will tell.
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