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 employment.
- The economy added 175,000 net new jobs in February, thereby bringing total in the past 12 months to 2.2 million. Job creations provide the foundation for a new set of homebuyers and for increased demand for commercial real estate.
- The unemployment rate moved up one notch to 6.7 percent. At its worst a few years ago, the unemployment rate was 10 percent. Though this is progress, there is a bit of murkiness in the unemployment figure because of those who dropped out of the labor force and are not counted. A cleaner measure is the employment rate: the proportion of the working age population with jobs. The employment rate has remained stuck at 58.8 percent, about the same level for the past five consecutive years. Before the recession hit, the employment rate had been about 63 percent. In short, there has been an improvement in the unemployment rate, but absolutely no improvement in the employment rate.
- Construction related jobs have increased by 152,000 in the past year. However, the degree of recovery is very weak considering the massive job cuts that occurred in this sector. Moreover, there appears to be sizable pent-up hiring demand in construction since home building activity has increased by 50 percent from the low of few years ago while the residential construction jobs have increased by only 12 percent.
- The average hourly earnings are beginning to move up. It rose to $20.50 per hour for nonsupervisory jobs. That is up 2.5 percent over the year and the fastest gain since 2010.
- The number of part-time workers who wish to have full-time jobs remains elevated. There are 7 million Americans in this status.
- A total of 91 million Americans are not in the labor force. Retirees, spouses looking after kids, college students, and the disabled are among those not in the labor force. Because of rising population, this figure should also rise over time. However, the pace of increase of the people not working in recent years has been higher than normal.
- Americans are defined not by birth, but by what they can achieve. It is said that common sense and hard work are all one needs to succeed in America. For example, an unschooled drifter named Benjamin Franklin ended up inventing many new things to improve the lives of ordinary people because he was out there working every single day. Not hindered by his parent’s illiteracy, Abraham Lincoln learned to read and write on his own without formal schooling in another example. Andrew Carnegie delivered newspapers in Pittsburgh as a teenager to get ahead and eventually became one of the wealthiest, after gladly leaving the old, stuffy world of Downton Abbey. Harriet Tubman risked her life many times to re-enter slave states in order to help more people gain freedom. Her words: “Even when you are tired, you keep going.” Fewer Americans today appear to live by the same enterprising spirit.
While national employment growth has been tepid in recent years relative to typical economic recoveries, some markets have done very well. Roughly a third of markets covered by NAR have outperformed the national average over this time period. You can find out how your market performed in the 4th quarter 2013 Local Market Reports.
- The U.S. experienced employment growth of 3.47% between December of 2012 and December of 2013.
- 30.2% of markets in this sample outperformed the US average, while 87.2% experienced positive employment growth.
- Of the top 10 markets, four were in Florida and two in Texas.
- Want a job? Go to the frozen tundra of North Dakota. Massive oil and gas production has helped the unemployment rate to fall to 2.6 percent. Starting wages for flipping burgers is said to run $15 to $18 an hour, while a truck driver can net near a six figure income. There is no need for complaint about the minimum wage in a state economy that creates jobs at a rapid pace.
- North Dakota is by far the leader of the pack in terms of job creation over the past 12 months. Florida, Georgia, Oregon, and Texas round out the top five job creating states.
- Though not a state, at the other end of the spectrum, Puerto Rico is bleeding badly. A total of 25,000 fewer people are working there now compared to a year ago. Its bond has not been officially classified into junk status.
- Jobs will be ever more important for home buying as affordability conditions have been coming down. Home prices are rising much faster than income. Moreover, mortgage rates will likely rise over the course of the year.
- The table below lists the full ranking of job growth rates by states and U.S. territories.
- President Obama made the following comment in his recent State of the Union speech: “One of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.” Irrespective of whether the President or private oil producers should get the credit, America is importing much less oil now than in any recent memory. Let’s hope that some of the big oil winners do what Rockefeller, the first U.S. oil producer, did with his oil money. He gave a sizable chunk to charities, including setting up many historically African American institutions of higher learning like Spelman College in Atlanta. As a result, many African American teachers graduated from there and passed on knowledge to poor rural schools across the South. The literacy rate among African Americans went from 20% before the giving to over 80% by the time of Rockefeller’s passing.