Those waiting for 2015 to be a great job market have a lot of waiting to do — the 1990s go-go economy is not coming back now, according to author Zachary Karabell, head of global strategy at Envestnet.
Karabell said this year may end up as the best year for job creation since 1999, but the results are hardly of the blockbuster variety.
"Statistically, with a labor force that the Bureau of Labor Statistics counts at 156 million, a few hundred thousand jobs created a month is not quite as large a number as it seems," he wrote in a column for Politico
Karabell said data from the Center for Economic and Policy Research show that because of the currently low labor force participation rate, the U.S. would need 2.5 years of job creation at November's rate to get back to pre-meltdown 2007 levels, and 3.5 years to hit the labor market mark of the late 1990s.
In addition, government data showing the November jump in wage growth —by 0.4 percent, or 5 percent annualized — also was not as good as it looked. That's because the multi-year trend only rose slightly and incomes for millennials are still down from their peak, by about 10 percent from 207 by one estimates.
"To ask whether the 'job market has turned a corner' or whether 'wages are rising' is to ask an inherently unanswerable question, or rather to ask a question whose answer will inevitably be only partly right at best and hence partly wrong," he noted.
"The reason is that 'wages' and 'jobs' are statistical categories that treat the entire economic system as one big unit, when in fact it is not and is arguably becoming less so."
The real answer to whether employment and wages are getting better in the United States may also depend on geography, age, race, demographics and education level, Karabell concludes.
"A college-educated woman has substantially better job opportunities than a Hispanic male with only a high-school diploma. Houston and Detroit are both metropolitan areas in the United States, but in terms of how they measure economically, they are about as similar as Nigeria and Norway," he said.
"The only thing that is clear about employment and wages, therefore, is the following: Jobs in the United States are relatively plentiful, but well-paying jobs are less so. And you’d better pick a job in a rising rather than a declining sector, or you’re screwed. . . . 'Wages' may rise somewhat, but only because they are rising well above inflation for some and not much in real terms for most."
The fact GDP is rising and unemployment is falling, while wage growth is stagnant, is not a positive development, Credit Suisse newsletter The Financialist
"This doesn't bode well for the strength or duration of the recovery: consumers need to earn more if they're going to spend more."
However, Credit Suisse analysts Neville Hill and James Sweeney said the U.S. economy is not necessarily broken, because wage growth does tend to lag economic growth, and the length of the current lag isn't that rare for a post-recession environment.
Credit Suisse still predicts the labor share of national income to remain below pre-2000 levels, which it concludes could be proof that the historic linkage between the economy and wage growth might have been permanently altered.
"We expect it to turn around somewhat," predicted Dana Saporta, U.S. economics analyst at Credit Suisse. "But the downward trend that has been in place is likely to continue."
© 2021 Newsmax Finance. All rights reserved.