The latest jobs report shows some silver linings for employment
Last week, the Labor Department released its monthly jobs report with mostly positive news: unemployment fell below 5 percent in January, suggesting that even with the weak global economy and decreasing confidence in financial markets, the American labor market continues to improve.
We looked through the report, and highlighted three key employment trends that agents should watch:
1. Construction Employment Grows – Residential construction saw a 4.5 percent job growth, thanks to a surge in new home sales that has necessitated more home construction. New home sales have risen 63.73 percent since 2011, even as homes have gotten more expensive over that same time period. Construction hiring has continued even through the colder months, further bolstering the strength of residential construction.
2. Wages on the Upturn – The other big point of note from the jobs report was that wages rose a half percentage point. While the growth is a small step toward making up for years where wages barely kept up with inflation, the past six months overall have been better for employee paychecks since the recovery began over six years ago.
Another standout fact of this month’s report is the increase in the length of the typical workweek in January, something that’s indicating a more concrete change in the employment landscape. This means that more employers are looking for more full-time employees, or are willing to offer more to their current part and full-time employees.
3. Prices, Rents Keep Pace – Unfortunately, there is a flip side to rising wages. Researchers at Trulia noted that home prices and rents increased 3 to 4 percent during the same period, largely nullifying the wage benefits. While households are still benefiting from the wage growth, an alarming number of renters remain cost burdened due to housing costs.
In fact, nearly half of all renters are cost burdened, meaning they devote at least 30 percent of their income to housing. That situation has created a conundrum: with mortgage rates at historic lows, it is cheaper to own than rent; however, with rents continuing to rise, it has become very difficult to save for a down payment. Ultimately, either wage growth must be stronger, or rent increases must slow down for renters to see any relief.