The February Jobs Report – 295,000 new jobs, official unemployment ticking down to 5.5% – exceeds Wall Street expectations. This is the 12th month of payrolls growing over 200,000, the longest streak since 1977 according to the White House. It marks a full five years of private sector jobs growth, the longest streak in history. The contrast with Europe, mired in austerity and a conservative central bank, is apparent.
But the good news is still sobering. Hourly wage growth remains at 2% for the year, far less than what’s needed to bring American families back. Excluding supervisors, private sector production workers saw no increase at all in February. That’s in part because there are still over 17 million Americans in need of full-time work. The percentage of the workforce employed or counted as unemployed is at 62,8%, basically static over the course of the last year, and still depressed below pre-recession levels.
Moreover there are warning lights in the report. Manufacturing added only 8,000 jobs, and manufacturing jobs growth has slowed over the year. With the dollar rising relative to the plummeting Euro and the manipulated Yen, American exports will be less competitive and imports cheaper. This economy isn’t growing fast enough to pull the rest of the world with it.
The monthly jobs report is just a marker. The real question is the effect the jobs growth will have on the Federal Reserve governors. In testimony before the Congress, Fed Chair Janet Yellen has already suggested that the Fed will signal this month that it is gearing up to raise rates, with most analysts predicting a rate increase by June if jobs growth remains robust.
But this is surely premature. Workers have not yet shared in the recovery. Household income is down, not up since the recession. The vast majority of Americans have not recovered the wealth lost in that calamity.
The Fed’s actions – from bailing out the banks to its Quantitative Easing programs -- have boosted stocks and saved Wall Street, but the benefits have been slow to reach Main Street. Inflation remains below the Fed’s target of 2%, which ought to be considered a floor, not a ceiling. There is utterly no reason – beyond the unceasing hysteria of the inflation hawks and creditors –for the Fed to raise interest rates, slow growth and throw people out of jobs just when workers might begin to see raises over the horizon.
One of the central ways the rules have been rigged against working families over the last decades is that the Fed has been – with rare exceptions – more attuned to the interests of creditors than the interests of debtors, catering to the demands of Wall Street over the needs of Main Street. Now, after the long, achingly slow, faltering recovery from the collapse in 2008, the Fed thumb on the scale needs to favor working families. Without any sign of accelerating inflation, it should keep interest rates near zero until workers begin to share in the rewards of growth.