Since Trump was elected, reading jobs reports has been a pleasurable experience. Jobs are growing. Economic conditions are improving, and there is nothing but good news. Let’s take a look at December and see how it caps Trump’s first full year in office.
Let’s begin with a look at December’s numbers. The country added 148,000 jobs. This number is noticeably lower than many other months in the past year, but it’s important to realize that a large number of seasonal jobs end before January 1. The 148,000 net new jobs includes the “layoffs” that come at the end of every Christmas, and that makes it a pretty good month. Wage growth staid frustratingly slow at 2.5 percent, but we’ll talk more about this in a moment. Unemployment is now down to 4.1 percent, and underemployment continues to drop.
Adding December to the 2017 totals, we find that the economy added 2 million jobs over the year. This is an economy that already had low unemployment reporting. A major portion of the job growth was tied to manufacturing, which added 200,000 new jobs. This was a complete reversal of a 15-year trend that saw manufacturing jobs slashed en masse. Construction was another major player with 210,000 new jobs over the year. These industries are the biggest contributors to the drop in underemployment.
It isn’t quite to an all-time low, but it is down to 5 million from a peak of about 10 million in 2010. There’s no question, Trump took a limping economy and began to unleash it to its true American potential.
The leaves us inevitably asking what comes next. The last year reversed some of the worst trends, but underemployment and wage growth are still problems. We can look at a few things to get an idea.
First, wage growth is usually expected to grow inversely with unemployment. Economists have been saying for two or three years now that low unemployment would help wage growth, but it hasn’t seemed to happen. If we look at smaller markets, we see that they aren’t exactly wrong. Phoenix, for example, has one of the lowest unemployment rates in the country, and their wage growth for 2017 was 5 percent.
The biggest reason wage growth hasn’t followed traditional projections is that underemployment. The jobs that were added over the last eight years have largely been part time and entry level. Trump emphasized growing industries that provide full-time positions at higher wages. This has already triggered a small amount of wage growth, and the trend is looking to expand.
When combined with the massive corporate tax cuts, we can expect to see wage growth over three percent by the middle of the summer. This would be the first time wage growth has been so positive since the recession first struck.
Hidden in all of these numbers is a fact that many miss. Trump has done more to help minorities this year than Obama was able to accomplish in eight years in regards to employment. Obama spearheaded a number of campaigns designed to help with employment problems for minorities and in urban neighborhoods. He did have some measure of success, and the number dropped, but he was never able to get minority unemployment below eight percent. This is a big deal, since most economists agree that a national unemployment around five percent is necessary for a healthy economy.
Trump abandoned most of Obama’s programs and just focused on improving hiring across the board. It proved the more successful method, and minority unemployment is now at 6.8 percent. That’s still above the goal, but it it’s the lowest unemployment rate Black Americans have ever seen. And, the expectation for next year is that the number will continue to drop quickly.
Trump, who has been mercilessly accused of racism, has brought more equality and freedom to struggling minorities than any president in recent memory.
The economy is winning, just as was promised. More Americans are working than at any other point in history, and wage growth is finally starting to rise to where we want it. We aren’t surprised to see that sound economic policy and getting the government out of the way was the key to letting Americans fix our own economy.
A few less obvious benefits have minority groups with unprecedented opportunity, and the better working and financial conditions can only help us battle the other major problems still threatening our great nation.
Regards,
Ethan Warrick
Editor
Wealth Authority
