(Bloomberg View) -- The latest jobs report illustrates one of the challenges President-elect Donald Trump will face when he assumes office: How to get U.S. workers a raise.
Overall, the report portrays an economy still growing at the slow-but-steady pace of the past several years. Despite an inconclusive move in the unemployment rate -- which fell from 4.9 percent to 4.6 percent largely because fewer people were actively seeking work -- job creation looked pretty healthy: Nonfarm employers added an estimated 178,000 jobs in November, bringing the three-month average to 176,000. That's more than enough to absorb natural growth in the labor force.
In a significant disappointment, though, the report didn’t offer more evidence that demand for workers is translating into higher pay. Average hourly earnings actually declined in November, bringing the year-over-year rate of growth to 2.5 percent, almost a percentage point short of the pace that prevailed in previous expansions. Here's how that looks:
Manufacturing of durable goods -- such as the furnace production Trump negotiated to keep in Indiana this week -- was among the weakest performers over the past few months. Others included construction and mining (think shale oil). Here’s a breakdown:
Wages matter both for current employees and for the broader incentives they create. Higher pay, for example, can coax people back into the work force, helping address a persistent deficit in prime-age employment: As of November, about 78.1 percent of people aged 25 to 54 had jobs, 2.4 million short of the pre-recession average. More-expensive labor can also prompt companies to make productivity-enhancing investments, increasing the economy's capacity to grow.
So what can Trump do? His plan to spend more on roads, bridges and other infrastructure might make a difference, though much will depend on the execution. A clearly defined fiscal stimulus, combined with a credible plan to reduce budget deficits in the longer term, could create jobs, boost wages and even improve the government's finances. Uncontrolled deficit spending, by contrast, could unsettle markets and undermine the whole concept of fiscal stimulus.
In other words, the president-elect will have to pivot from publicity stunts -- such as the jobs deal with Carrier Corp. -- to addressing the economy's shortcomings in a systematic and accountable way. Let’s hope he has what it takes.
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