February Jobs Report: Here’s What to Watch For
The Labor Department will release the hiring and unemployment figures for February at 8:30 a.m. Eastern time. The monthly report provides one of the better snapshots of the state of the American economy. Here’s what to watch for:
Wall Street analysts expect the labor market to remain strong, with payrolls growing by 175,000, according to MarketWatch. Over the last three months, monthly job growth has averaged a remarkably strong 241,000.
Average hourly earnings are expected to rise by 0.3 percent in February, up from January’s 0.1 percent rise, bumping up the year-over-year gains to 3.3 percent.
A strong start to the year
Analysts are expecting that the number of workers hired will drop sharply from January’s totals. No matter. Employers surprised everyone with blockbuster payroll growth of 304,000 jobs in the first month of 2019. Even if only half that number were added in February, it would still outpace the growth in potential workers. Don’t be surprised, however, if January’s totals are revised downward.
The aftereffects of the shutdown
The labor report may continue to bear traces of the 35-day government shutdown. Furloughed federal workers and affected contractors had to scrounge for part-time work when their paychecks were halted. In January, workers who snagged part-time jobs for economic reasons jumped by nearly half a million. Those temporarily unemployed rose by roughly 175,000. Now federal workers should be back to their full-time jobs.
“That could mean a sharp drop in number of part-time workers for economic reasons,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “They now have paychecks and don’t need to drive Uber to make ends meet.”
Those shifts lifted labor-force participation and the unemployment rate in January, Ms. Swonk said, but both are likely to have ticked down in February.
The shutdown also delayed hiring both within the government and in the private sector, in part because the federal electronic service that verifies that prospective employees are eligible to work — E-Verify — was not operating. Some of those hires will show up in the February figures, but others, particularly in the public sector, may still be in the pipeline.
The changing face of the work force
Changes in the labor market go hand in hand with changes in the family and broader culture.
A sizable chunk of workers who have joined the labor force over the past three years have been young women 25 to 34, reversing a long decline.
Hispanic women, whose jobless rate has been cruising along at historically low levels, accounted for a disproportionate share of the new entrants. Although they make up less than one-fifth of prime-age women — those 25 to 54 years old — they accounted for almost two-thirds of the increase in female participation rates since 2015, according to the Federal Reserve of Atlanta. One cause could be a striking drop in the birthrate among Hispanic women, which fell 31 percent from 2007 to 2017. Many of these women are delaying childbearing to finish school and start careers, according to the Pew Research Center.
Fewer gains have been made by young and prime-age men without a college education. A greater share of men work than women, but the gap has been narrowing.
In 1990, about 95 percent of men 25 to 34 worked, compared with 74 percent of women that age. Today, the figure for such men has declined to 89 percent, while it has risen to nearly 77 percent for women.
New research by economists at the University of Michigan found that changes in family structure, combined with the erosion of stable, middle-income jobs, have had a powerful impact on men’s employment. Marrying and forming a family are closely linked to finding a steady job. Since the 1960s, men without a college education have been doing less of both, and instead cycle in and out of the labor force more frequently.
So keep an eye on labor-force participation. More men in the work force would signal progress.
The effect on paychecks
Nominal wage growth has been picking up in recent months, although January’s increase was small. The gains, buoyed in part by increases in the minimum wage in several states, have tended to benefit those on the bottom rung of the wage ladder.
Changes in income are how most people feel the economic tides, and several analysts are expecting February to show more sizable growth.
“It’s not a stretch to get to 3.4 percent year over year,” said Dan North, chief economist at the credit-insurance company Euler Hermes North America. That would be the best wage growth in a decade.