The October jobs report provides solid evidence that the labor market is improving for most of the labor force. While the pace of job growth slowed slightly to 161,000, there was an increase in the prime-age employment rate (ages 25-54) and an uptick in the pace of wage growth. It appears that workers are taking advantage of a tighter labor market to move into better paying jobs.
The employment-to-population (EPOP) ratio for prime age workers rose 0.2 percentage points to 78.2 percent. This is the highest it has been in the recovery, although it is still 2.0 percentage points below the pre-recession peak and 3.7 percentage points below its 2000 peak.
Other data in the report were clearly positive. Wage growth appears to have accelerated modestly. The average hourly wage over the last three months increased at a 2.9 percent annual rate compared to its average over the prior three months. Over the last year, the average hourly wage is up 2.8 percent.
This is consistent with a story where workers are looking for better paying jobs. In this respect, it is worth noting that the share of unemployment due to voluntary quits rose 0.9 percentage points to 12.1 percent. This is the highest level for the recovery and comparable to the pre-recession rates, although still more than 3.0 percentage points below the 2000 peaks.
Also consistent with this view is the fact that lower paying industries were not sources of big job gains in October. Restaurants added just 9,900 jobs in October, compared to an average of 21,000 over the last year. Retail actually lost 1,100 jobs in the month.
On the whole, this report indicates that the labor market is getting into a situation where most workers can benefit from the economy’s growth.
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