3 Things You Might Have Missed in February’s Jobs Report

March 6, 2015

As one of the largest resources to find jobs in the U.S., Glassdoor is becoming more closely aligned to the underlying U.S. job market and the broader global economy. And our community of job seekers, employees and employers are interested in staying on top of trends in today’s economy—and that means making sense of the latest job market numbers.

Today, the Bureau of Labor Statistics released its February jobs report. As expected, it was another strong jobs report, with big gains in jobs and yet another drop in the unemployment rate to 5.5 percent. Here are three things job seekers and hiring managers should take away from today’s report:

#1. More Signs of a Strong and Growing Job Market
All indicators point to the strongest job market in a generation. The economy has added an average of 275,000 new jobs per month over the last 12 months. The last time that happened was way back in March, 2000. We’re finally escaping the long shadow of the 2007-09 “Great Recession,” and this is the best time in a decade to be looking for a new or better job.

Most economists agree that 5 percent unemployment is a sign of a healthy and sustainable job market. The official rate (known as “U3” by economists) fell to 5.5 percent in February. That’s dramatically down from 10 percent at the end of the last recession six years ago. There’s still room for improvement, but the drivers’ seat in today’s job market is clearly shifting from employers to job seekers.

For workers who aren’t in an ideal career position, now is the best time in a decade to start job searching. For employers facing increasing competition for great candidates, now’s time to shore up your employment brand and start getting creative about attracting talent for open positions.

#2. Sidelined Workers Are Starting to Get Back into the Job Market
One of the hallmarks of the last recession was the huge number of workers who were sidelined, stuck in part-time jobs or dropping out of the labor force entirely. There are around 6.5 million workers not in the labor force who say they want a job. That’s up from around 4.5 million in normal times.

Thankfully, we’re now starting to see evidence that these workers are starting to re-join the labor force—great news for those concerned that today’s job market prosperity isn’t being widely shared. Two key figures to watch from the BLS are the “labor force participation rate” and a broader measure of unemployment that includes discouraged and other sidelined workers known as “U6” by economists.

In February, the labor force participation rate essentially held steady at 62.8 percent, down only 0.1 percent from last month. It has been on a long, secular decline in recent years due to retiring Baby Boomers leaving the job market, but a steady rate suggests rejoining of sidelined workers is helping offset that decline. Also, the broader “U6” unemployment rate fell sharply to 11.0 percent in February, down from 11.3 percent the month before. That’s historically still high, but the decline is a sign that many discouraged workers are finally rejoining the U.S. labor market.

#3. Wages Are Still Growing – Slowly
In a normal year, wages should be growing at around 3 to 4 percent per year. The last few years have been anything but normal, with wage growth lagging far behind the norm at around 2 percent a year. The new February numbers confirm this trend, with average hourly earnings growing only 2.0 percent from a year ago to $24.78 per hour.

Following the recent move by Walmart, T.J. Maxx and other retailers to boost wages for retail workers, most economists expect to see stronger wage growth soon. Wages have been on the upswing in food service and retail, and employees are expecting more. In fact, in a recent Glassdoor survey, we found one-third of workers report they’ll look for new jobs if they don’t get a raise this year.

What to Watch for Next Month: As labor markets tighten, watch for a return to 2.5 – 3.0 percent annual growth in average hourly earnings. However, economists teach that worker productivity, not just a tight labor market, is what drives wages in the long run. Productivity is down sharply for U.S. workers since the 1990s, growing at just 1.7 percent per year today compared to 4 percent in past decades. Until productivity turns around, we shouldn’t expect rapid or sustained growth in America’s paychecks.