Friday’s Jobs Report: Riding a Wave of Tax Stimulus
Last month the U.S. economy ran hot, with the nation’s unemployment rate ticking down to an 18-year low. What’s next for the job market? Here’s what we’re watching for at Glassdoor in this Friday’s June jobs report:
- +177,000 new jobs added to nonfarm payrolls in June;
- Unemployment rate steady at 3.8 percent;
- Average hourly earnings up 2.8 percent from one year ago;
- Labor force participation rate steady at 62.7 percent.
As summer unfolds, the U.S. economy today is running at full speed. Employers have added an average of 207,000 jobs per month to payrolls so far this year — up from 182,000 jobs per month last year and 195,000 in 2016 (see chart below). That continued uptick in job creation has pushed the nation’s unemployment rate down to 3.8 percent, with unemployment in some metro areas creaking down as low as 1.5 percent.
It’s unusual for job creation to surge this late in the business cycle. As of June, the current economic expansion (that is, the length of time since the last recession) reached 9 years or 108 months. That’s remarkably long: The average length of a U.S. expansion since WWII has been 58 months, or just under 5 years.
Job growth tends to slow late in an expansion as the pool of unemployed workers shrinks, making it harder for employers to add new jobs. But with the $1.5 trillion tax cut enacted in January 2018, the economy appears to be riding a wave of fiscal stimulus today. The Federal Reserve Bank of Atlanta’s latest forecast for the economy’s growth in the second quarter of 2018 was a whopping 3.8 percent — nearly double the economy’s 2 percent annual pace of growth from the first quarter.
Today on Glassdoor, there are roughly 6.3 million open online job postings in the U.S.(1) That’s climbed steadily throughout 2018, as employers struggle to fill open roles in fast-growing sectors, including healthcare, e-commerce, tech and professional services. This demand is finally putting upward pressure on wages, which stagnated throughout much of 2017. In the May jobs report, wages were up 2.7 percent from a year ago and we expect to see that accelerate to 2.8 percent in June.
In Glassdoor’s recent June Local Pay Reports, median base pay for full-time workers rose at the fastest pace in 2018, up 1.6 percent from a year ago to $52,052 per year. This continued pay growth is a likely sign that today’s 18-year-low unemployment rate is finally translating into broad-based wage gains.
According to data from Glassdoor, jobs with the fastest pay growth in June included e-commerce roles such as warehouse associate (up 6.8 percent to $43,961 per year), material handler (5.1 percent to $36,179 per year) and truck driver (up 7.3 percent to $54,659 per year), as well as several lower-paying jobs including retail key holder (4.9 percent to $29,746 per year), security officer (4.7 percent to $35,554 per year) and bank teller (8.1 percent to $31,108 per year).
With the economy running hot, we’re finally starting to see pay raises for many of America’s lowest-paying jobs — something we’ll be watching for closely in Friday’s June BLS jobs report.
To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.
1.Source: Internal Glassdoor statistics. Figures represent unique active U.S. job postings on Glassdoor as of Monday, June 25, 2018.