Labor market is thriving far better under Trump than under Obama
The employment news in September was far better than you might think. Headlines showed consistently that the U.S. Bureau of Labor Statistics (BLS) survey of businesses marked a loss of 33,000 jobs in September. But this survey reduces employment if a person doesn’t work and isn’t paid even if they still have a job.
The BLS also conducts a separate survey of households that considers workers employed if they keep their jobs. As such, it is a better measure when there is a temporary business disruption such as the one Hurricane Harvey and Hurricane Irma recently caused. This survey showed an impressive 906,000 more people employed in September.The BLS uses the household survey to report the unemployment rate, which declined significantly in September to a 16-year low of 4.2 percent. The last time it was this low was in February 2001. But that wasn’t the only positive significant news with respect to the strengthening labor market. The official unemployment rate can drop for reasons other than labor market strength, such as people dropping out of the labor force, unable to find jobs or retiring, who are no longer considered unemployed.
During the Obama administration, a major reason the unemployment rate declined was that fewer people were in the labor force because what the BLS calls the labor participation rate continually declined as people gave up the search for a job or retired. For purposes of the official unemployment rate, if you have not looked for a job in the past 30 days, the BLS considers you out of the labor force.
Under President Obama, labor participation hit lows last seen in the late 1970s. So rather than a true reflection of labor market strength, the declining unemployment rate was, in great part, a reflection of the declining percentage of people actively looking for work. What we really want to see is a declining unemployment rate with a higher percentage of people working or actively looking for work, indicating a strong and growing economy.
In September, that’s exactly what we had. While the unemployment rate declined to a 16-year low, the labor participation rate rose from 62.9 percent to 63.1 percent, exceeding 63 percent for the first time in 42 months. In other words, in September, a smaller percentage of people were unemployed while the workforce expanded because a larger percentage of people were working or actively looking for work. That is very positive economic news.
An even better indicator of labor market strength than the official unemployment rate is what the BLS calls the U-6 unemployment rate, a broader measure that many economists consider the real unemployment rate. It counts people as unemployed for a year after they give up their job search, rather than just 30 days, and discounts the importance of part time jobs by counting people as unemployed who are working part time because they are unable to find full time jobs.
At 8.3 percent, this measure has dropped more than a percentage point since January, when President Trump took office, and is at its lowest level since June 2007, six months before the recession began. Again, that is very positive economic news. Another measure of labor market strength is the percentage of Americans who are working. This measure takes the population of Americans over 16 years old and not in jail, the military or an institution and says “x” percent have a job. The higher the percentage, the stronger the labor market. In September, it was indeed higher.
In fact, the eight months following President Trump’s inauguration are the only months since February 2009 in which 60 percent or more of Americans were employed and it’s been above 60 percent for every month of the Trump presidency. In September, the percentage of Americans who were employed reached 60.4 percent. The last time it was this high was January 2009, the month President Obama took office.
Finally, the jobs are better. Since January, the number of people working full time has increased by two million while the number working part time increased by only 245,000. In September alone, the number of people working full time increased by 935,000. This helps explains why average hourly wages have grown by 2.9 percent over the past 12 months, the highest level of annual wage growth in more than eight years.
Bottom line, thanks in great part to President Trump’s deregulation efforts, businesses across the country are hiring and more Americans are working better jobs for higher pay. Just imagine the positive impact if the Senate, or even just Senate Republicans, woke up and supported the president’s efforts to pass health care and tax reform.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He was nominated by President Trump to serve as U.S. labor secretary. Follow him on Twitter @AndyPuzder.