Job gains were solid in April. But the wage growth remains stuck and not matching up with the rises in rents and home prices. Nonetheless, more jobs even with slow wage growth means continuing support for housing demand and rising demand for commercial real estate leasing activity.
Here are the numbers in detail:
223,000 net new jobs in April
2.98 million net new jobs in the past 12-months
Nearly 12 million net new jobs from the cyclical low point from 2009
The unemployment rate fell to 5.4 percent (the lowest since May 2008)
Even with the job gains, however, there are fresh sets of college and some high school graduates looking for work. Not all are finding jobs. The employment rate remained stuck at 59.3 percent of American adults. Before the recession, 63 to 64 percent of adults were working.
Wage growth is stuck at near 2 percent. Before the recession in 2009, wages were rising by 3.5 percent. The current wage growth therefore is not catching up with changes in housing costs. Rents are rising close to 4 percent and home prices are rising at 7.5 percent.
The construction industry is hiring. The hard-hat construction jobs were expanded by 57,800 over the past 12 months. Moreover, the general contractor employment increased by additional 188,500 over the past 12 months. Construction is one of the better paying industries with the average hourly wage of $27.28. By comparison, workers at retail stores earn $17.32. Therefore, one quick way to boost a personal pay is to acquire skills in carpentry, bricklaying, and other construction related jobs.
Job growth could slow in few months. Why? Labor productivity was negative for the past 6 months. The jobs momentum could slow from current 3 million net new jobs in 12-months to around 2 million net new jobs.
As the nation celebrates the victory over evil in the Second World War, we should note the special work experience of the Greatest Generation (as coined by Tom Brokaw). They suffered the unemployment and hunger during the Great Depression. They went to Europe and islands across the Pacific Ocean to fight and win the war. Many women worked outside of home for the very first time. They then after the war worked to build the American economy into an unmatched superpower status.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.