February Jobs Report Was So Good, It Caught Many Economists Off Guard
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U.S. employers added an impressive 313,000 jobs in February and the unemployment rate held steady at 4.1 percent. That's the latest news from the Labor Department. And there were other signs of improvement in today's report, as NPR's Chris Arnold tells us.
CHRIS ARNOLD, BYLINE: The U.S. economy is chugging along and in good shape with employers confident enough to do plenty of hiring. And they brought on so many people last month that it caught experts by surprise.
JUSTIN WOLFERS: Wow. It's a very, very, very healthy report.
ARNOLD: Justin Wolfers is a labor economist at the University of Michigan. He says another good sign here is that workers who've been on the sidelines - not even looking for a job, some of them discouraged - a lot of them are back either finding jobs or at least looking. And this is a very dramatic number. That helped to bring 806,000 people into the workforce last month. That's one of the biggest increases in nearly 35 years.
WOLFERS: And that's great because the recession after the financial crisis booted millions out. The big question for economists has been, how many of those people are going to return?
ARNOLD: Wolfers says today's report shows that a lot of them are returning. Richard Burkhauser, a White House economic adviser, agrees.
RICHARD BURKHAUSER: Those people who have been on the sidelines are moving back into the labor force. And this month certainly demonstrates that they're out there and ready to work.
ARNOLD: Still, the reality is there's a long way to go. John Silvia is the chief economist at Wells Fargo. He says this past month is a step in the right direction, but...
JOHN SILVIA: We need about a dozen more steps.
ARNOLD: Silvia says labor force participation is still low by historical standards. And he says in prior recoveries, we've been able to get more of these people back to work faster.
SILVIA: One of the great comments that you always heard about the economic expansion under Bill Clinton is they kept on bringing more and more people into the labor force from the sidelines. And we really need to get those numbers up.
ARNOLD: Economists say still having so many workers in the wings is a big part of what's been keeping wage growth overall pretty sluggish for millions of American workers. After an uptick a month ago, wages in this report returned to a more modest growth rate. Too much wage growth can create problems and spark inflation. But speaking on CNBC today, Charles Evans, the president of the Chicago Fed Reserve Bank, said that the economy could handle bigger wage increases than we're seeing.
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CHARLES EVANS: I would have liked a stronger wage number. With the unemployment rate at 4.1 percent it's lower than what most of us think is a sustainable long-run unemployment rate, but it doesn't seem to be leading to wage pressures yet.
ARNOLD: Another positive from today's report - job growth was broad-based across many sectors, including construction. John Silvia says that companies are building a lot of office parks and warehouses. That's leading to strong hiring and, at least in that industry, wage growth that's solidly above the national average. Chris Arnold, NPR News.
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