Payrolls are up, unemployment is down but some uneasiness in the economy took the shine off the October jobs report.
The economy added 214,000 jobs in October, bringing the total for the year to almost 2.3 million. The unemployment rate is down to 5.8%, the lowest level since July 2008 and down sharply from 7.2 percent a year ago. October also marks the 56th straight month of private sector job gains. The U.S. labor market is currently on track to have its best year since 1999.
Still, the report fell short of expectations. Economists had estimated there would be 235,000 added jobs this month, and concerns surround wage growth and the quality of jobs being created.
Hourly wages barely budged in October and are up only 2 percent for the year. That’s just slightly ahead of the rate of inflation. The restaurant, leisure and hospitality sector added 52,000 jobs and retailers added 27,100; both are sectors that traditionally pay low wages.
Dan Alpert, Managing Director of Westwood Capital, says we are back in the 2013 pattern of low wage job creation. “When you go back to 2013, some 58% of all the jobs that we’ve created are in the very low wage sector,” he says. “Those low wage sectors are retail, temp work, social assistance and leisure and hospitality. And combined those sectors do just a little more than 50% of all the other sector in terms of wages.”
While higher wage jobs have grown in 2014, the pace has slowed in recent months. In October, the manufacturing sector grew by 15,000 jobs, and professional and business services added 37,000 jobs.
The end of long-term unemployment benefits may be a contributing factor. Alpert says, "Many economists at the beginning of the year projected [this was] going to force people back into the market at low wages, and that’s exactly what’s happened."
Just 31% of Americans say now is a good timacte to find a quality job, according to a recent Gallup poll. However, that number is at the highest level since the 2008 financial crisis.
The economy was a top issue for voters heading into the polls this week, as Republicans won the Senate and retained control of the House of Representatives. “The repudiation of Obama that occurred this week at the election I think is directly tied to the fact that not only do people have a perception that things aren’t going well," Alpert says, "But that things actually aren’t going well for them.”