Whether your job is on Wall Street or in a warehouse, at a construction site or behind a cash register, Friday’s jobs report offered some fabulous news.
A combination of robust job creation and a steadily-growing work force underscored the economy’s strength. Meanwhile, modest wage growth calmed any concern that competition for workers was driving up salaries and inflation.
For the fifth month in a row, the jobless rate remained at 4.1 percent, an impressive 17-year low. And with hundreds of thousands of people moving into the job market, analysts who have insisted that the potential pool of workers has been depleted were left scratching their heads.
Chief economist at Morgan Stanley Ellen Zentner told the New York Times, “I love it. We were able to create enough jobs to accommodate new seekers and keep the unemployment rate steady.”
And on Twitter, President Trump applauded the news in all caps: “JOBS, JOBS, JOBS!”
But for workers, the meager 0.1 percent rise in hourly earnings was a disappointment. Since October, year-over-year wage growth had been increasing at a much faster monthly rate in comparison with the slow increases that have incessantly worn down the standard of living for millions of low- and middle-income American workers.
For Wall Street, the report was a dream come true.
The impressive jump in average hourly earnings in January is widely acknowledged as causing a market sell-off last month when more and more analysts predicted that the Federal Reserve could raise rates more aggressively than previously assumed. That move would likely dampen lending, hiring and business growth.
But as it turns out, the report seems to indicate that the Fed will remain on course for three increases of a quarter-point in the benchmark interest rate over 2018, starting this month when it meets under its new chairman, Jerome Powell
“A strong jobs report with less wage inflation tells the market that current concern about the wage issue is overblown,” said Jonathan Golub, chief United States equity strategist at Credit Suisse. “The market has to think that is terrific.”
Stocks increased significantly during Friday’s trading following the report. R. Acosta, the labor secretary, credited the recent tax bill passed by Republicans for continuing to “boost economic confidence.”
Mr. Golub, however, had doubts about the tax cuts being responsible for this report, noting that the larger global recovery has remained strong since the middle of 2016.
However, other administration policies could make February’s report especially significant. With Trump’s move to impose tariffs on steel and aluminum imports, and increasing rumors of a trade war, the recent job numbers could create a baseline to calculate the impact of trade restrictions and retaliation over the coming months. Manufacturing job gains, for instance, totaled 31,000, more than twice the January figure.
“We need to hire 300 people in the next 90 days,” said Brian Krenke, president of KI, an employee-owned furniture maker based in Green Bay, Wis. “It’s different from years ago, when people were lining up for jobs.”
The company employs roughly 2,800 workers across half a dozen factories. Mr. Krenke said he was looking for both entry-level and skilled workers, and making a spirited recruitment campaign for people graduating from both high school and technical colleges.
Just as businesses focus on the customer experience, Mr. Krenke said employers need to give more attention to the experience of workers. “We want them to walk away from the interview saying this is really an organization we want to work for,” he said. “You really need to be much more flexible and accommodating these days.”
In fact, competition for workers has become quite fierce in certain sectors.
Diane Swonk, chief economist for the accounting firm Grant Thornton, said she had heard reports of trucking companies paying drivers six-figure salaries, along with $20,000 signing bonuses to tempt them away from competitors. Companies are also making a bid to train new drivers — even in the face of risks that those workers could be poached by other companies.
“For years and years, the trucking companies said they couldn’t find drivers, but they wouldn’t raise wages,” Ms. Swonk said. “Well, now they are.”
The construction industry is booming as well. 61,000 jobs were added last month — an impressive figure for the off-season — bringing four-month total gains to 185,000.
Yet in the midst of these optimistic developments, there remains a lack of employment among large numbers of working-age men. And even though large economic differences across regions have long been a defining feature of the United States, that gap seems to be growing. Harvard University economists Edward Glaeser and Lawrence H. Summers say the disparities are most prominent in three regions: the prosperous coasts; the Western heartland, with its natural resources and higher education levels; and the Eastern heartland, which extends roughly from Mississippi to Michigan.
That third region is suffering from a host of social and economic ills, including umenployment, disability, opioid-related deaths and rising mortality, they said.
“The income and employment gaps between three regions are not converging, but instead seem to be hardening,” they write in a paper published in the latest edition of the Brookings Papers on Economic Activity. “America appears to be evolving into durable islands of wealth and poverty.”
Instead of moving to higher-income regions to pursue employment opportunities, many remain stranded in those economic dead-end zones. There are a number of complex reasons, but most prominent among them are skyrocketing housing costs and the inability or difficulty of taking benefits like Medicaid across state lines. Those obstacles explain why a shortage of U.S. workers does not necessarily translate into more and better jobs for harder-to-employ people.
Yet beyond those depressed islands, the economy is racing forward.
“Despite the slowdown in the year-over-year wage number, this was an incredibly strong jobs report with widespread benefits,” Mr. Kolko said. “Two of the most important household surveys were at their best level in almost 10 years,” he added, referring to a drop in the number of people who have been unemployed for more than half a year, and an increase in the proportion of prime-age workers (25 to 54 years old) in the labor force.
“Today was remarkable,” he added. “It’s really hard to find any bad news.”