Ball State University economist Michael Hicks says, despite the national unemployment rate dropping below six percent, the “underlying” numbers in this month's report are worrisome. He says a shrinking labor force, lower wages and the types of jobs that are being created suggest U.S. households are not better off over the past year. Ball State economist Michael Hicks says September's job numbers paints a familiar story of mixed growth.
“Things are better, but not yet good,” he says. “The numbers aren't bad as 248,000 new jobs were added last month and employment for August was revised up to 180,000 from 142,000.”
While the U.S. Department of Labor announced today that the nation's unemployment rate dropped to 5.9 percent from 6.1 percent, a closer examination of the underlying numbers is far less satisfying, says Hicks, director of Ball State's Center for Economic and Business Research.
“The labor force shrank by 97,000 instead of an expected growth of more than 100,000,” he says. “That means there are more than 200,000 fewer people working at the end of September than normal growth over the past 30 days would have suggested. The reason may lie in the jobs themselves as more than two-thirds of new jobs created were by employment agencies, retail outlets and restaurants.
“Even more worrisome, both wages and hours worked edged down slightly. Overall, wages for the year are just about even with inflation, suggesting American households are not better off over the past year.”
Hicks says the latest job growth trend suggests that the U.S. economy will end the year with GDP growth in the 2 percent range.
Source: Ball State University