The positives in the October employment report are worth pointing out. With 214,000 net new payrolls last month, the US economy has now scored 9-straight months of 200,000-plus job growth. The unemployment rate fell to 5.8%, its lowest level since July 2008. That, despite a 416,000 increase in the size of the labor force (which was countered by a 683,000 rise in employment in the household survey). The labor force participation rate was up, the employment rate was up (see above chart), the underemployment rate down. Good stuff all around.
Not so good was take-home pay. Where is the wage growth? Average hourly earnings for all employees on private nonfarm payrolls rose by just 3 cents to $24.57 , meaning that over the year earnings have risen by just 2.0%, barely above inflation. And as economist Douglas Holtz-Eakin pointed out in a morning note. “October in isolation was even weaker, with growth at 1.5 percent annually.” Barclays put it this way, “Earnings were the soft spot in the October employment report.” As this chart illustrates, it is hard to call this a “recovery” when wages are going nowhere: