December 2015 Jobs Report

Unemployment Rate: 5.0 percent

Unemployed Americans: 7.9 million

Employment and Unemployment

1. The Department of Labor reported an unemployment rate of 5.0 percent for December, unchanged from last month. It reported an increase of 292,000 nonfarm jobs in December. Employment for October was revised up from 298,000 to 307,000 jobs created; and November was revised up from 211,000 to 252,000. 
2. In 2015, the economy added an average of 221,000 jobs per month, compared to an average of 260,000 jobs created per month in 2014. 
3. Unemployment in December among those ages 16-19 was 16.1 percent, up 0.5 percent from last month. Among those 20-24, the unemployment rate was 9.4 percent, down 0.2 percentage point from November. For African-Americans, the unemployment rate was 8.3 percent, down 1.1 percentage points from last month.
4. The number of long-term unemployed, those unemployed for 27 weeks or more, was 2.1 million. They account for 26.3 percent of the unemployed, up from 25.7 percent in the prior month and down from 31.0 percent a year ago.
5. The “real” unemployment or U-6 rate is 9.9 percent, unchanged from last month. This is the total percentage of unemployed and underemployed workers.
6. The “real” number of unemployed Americans is 15.7 million. These are people who are unemployed (7.9 million), want work but have stopped searching for a job (1.8 million), or are working part time because they cannot find full time employment (6.0 million).
7. In December, employment grew by 73,000 in professional and business services; 45,000 in construction; and 39,000 in health care employment. Employment in government grew by 17,000 in December, spread over the federal, state, and local level. Employment in mining fell by 8,000 in December and declined by 129,000 in 2015.

Labor Force Participation

1. The labor force participation rate is 62.6 percent, up 0.1 from last month and remaining near the lowest level in 38 years. The persistently low labor force participation rate shows that millions of Americans are staying on the sidelines. Since April 2014, the participation rate had been stuck in a narrow range of 62.4 and 62.9 percent. Prior to the recession, the rate stood at 66 percent. 
2. If the labor force participation rate were the same as when President Obama took office, the unemployment rate would be 9.4 percent.
3. The share of American adults with jobs in December was 59.5 percent, up 0.2 percent from last month. This is about 4 percentage points below its pre-recession peak, and relatively unchanged since October 2014. 
4. Last month, the Federal Reserve voted to raise its main interest rate by 0.25 percent. It was the first rate increase in almost 10 years. As noted in its statement, the Fed “will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.” The next Fed meeting is January 26-27. 

Wages

1. In December, average hourly earnings for all employees on private nonfarm payrolls fell by 1 cent to $25.24. Over the year, average hourly earnings have risen by 2.5 percent.
2. December was the 77^th straight month that year-over-year hourly wage growth has been at or below 2.5 percent. Prior to the recession, wage growth routinely exceeded three percent.
3. As noted in the Wall Street Journal, modest wage growth remains a concern. A tighter labor market should lead to higher wages and ultimately stoke consumer inflation. Without stronger wage gains, it will be difficult for inflation to move back toward the Fed’s 2 percent annual target.