In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest data on job creations.
- The jobs report for November is good, with 203,000 net new job creations, thereby portending good support for future home sales and for commercial real estate leasing. Over the past 12 months, 2.3 million net new jobs have been added to the economy.
- The unemployment rate fell to 7.0 percent, marking a continuing improvement from the 10 percent jobless rate four years ago. But the employment rate – the share of adult population with jobs – continues to remain at cyclical low levels with only 58.6 percent of the adults working compared to the 62 to 63 percent range of a decade ago. About 8,000 baby boomers reach the age of 65 every day and are ready to retire, which partly explains for the decline in the labor participation rate. Still there are a substantial number of adults under the retirement age who are not working for a variety of reasons.
- The number of people with jobs but working only part-time hours is double the more usual rate.
- Construction jobs, however, are rising at a sluggish pace. Only 178,000 new ones have been added in the past year to this sector, which includes general contractors. An additional 2 million more construction jobs are needed to get back to the prior peak. It is a reflection of slow growth in housing starts and new commercial construction. The exceptionally difficult access to construction loans from new regulatory uncertainty and compliance costs are hindering more new activity.
- The average hourly earnings rose by 2 percent from a year ago to now $24.15. Sluggish wage growth combined with a double-digit rise in home prices will hold back some consumers from buying a home.
- All in all, the labor market is improving. That’s good news directional wise for the real estate market. However, to truly get us back to ‘normal’ conditions, where recent college graduates are able to get meaningful employment and the level of welfare dependency declines to acceptable levels, an additional 8 million jobs are quickly needed.
- Research shows that job satisfaction is directly related to life satisfaction. For most working-age people, therefore, not having a job means unhappy conditions. No doubt the genuine feeling of liberation comes from the ability to spend and save one’s own earned income without being dependent on others. That is why job growth has to be one of the top priorities for the country.