You've Got A Friend In the Trend
On this first Friday of every month, the Bureau of Labor Statistics provides the nation with a close look at what’s been going on in the job market. While you don’t want to put too much weight on any one month of data, the report is bursting with valuable info on stuff that matters a lot to real people, like job growth, unemployment, and earnings.
One useful thing to do with these data is to average over a few months, to smooth out some of the jumpiness in the monthly numbers. And when you apply this smoothing to private sector job growth, a promising pattern emerges.
The figure below takes an average of monthly job growth in the private sector over the past three months (Dec, Jan, Feb), and compares that to the same average last year and two years ago.
Two years ago, when President Obama took office, we were hemorrhaging jobs at a rate of over 700,000 per month. Our Administration attacked the problem, first with the Recovery Act, and later with a broad set of initiatives to put more money in family budgets, free up credit for small businesses, and most recently, boost paychecks with a temporary payroll tax cut.
As you can see, the rate of job loss diminished significantly by last year at this time, down to 55,000 a month. Then, in March of last year, the private sector began adding jobs on net, and has been doing so every month since, to the cumulative tune of 1.5 million so far. And as you can see, over the past three months, private sector employers have been adding 152,000 per month, on net.
Now, let’s be clear about this: we’ve still got a long way to go. While the unemployment is also trending the right way—down from 9.8% last November to 8.9% last month (although these numbers are also jumpy month to month)—the jobless rate remains much too high, and employers need to add millions more jobs before working Americans face the opportunities they need and deserve.
We also need to protect these friendly trends by avoiding policy mistakes, like cutting back on investments that will propel economic growth, such as the President’s innovation, education, and infrastructure initiatives. It’s measures like these that will help kick the jobs trend in high gear and win the future.
Like I said, we’re not there yet, but the only way to get there is to head in the right direction. And as the figure below shows, that’s what we’re doing.
Jared Bernstein is Chief Economic Advisor to the Vice President