The Dow is up about 20 percent since Donald Trump’s election. Wages are up 2.5 percent on an annualized basis. That’s what you need to know about the U.S. economy right now.
Sure, today’s jobs report has lots of people cheering. Most of them are cheering, however, because the news is good for them, not you. People with a lot of money invested in the stock market are actually scared every time a jobs report comes out. If it’s too bad — if there are signs that the economy is slowing down — well, that could hurt the market. But far worse would be evidence that wages are growing. Why? Because that might lead to inflation, which might lead the Federal Reserve to raise interest rates more quickly than expected, which would kill the long-running bull market.
So, today’s news is a “Goldilocks” report for people with a lot of money who like to make more of it by doing nothing. That’s an insult to people who work to make their money, however. For them, the news isn’t good. Even though unemployment is low, it’s important to know why it’s low.
Because low-wage jobs are going gangbusters.
Dig into the report, and you’ll see jobs in “food service and drinking places” grew fastest. Of the 205,000 new jobs everyone is excited about, 53,000 of them were in “food service and drinking places.” That’s not surprising during the summer, but it’s nothing to get excited about either. It’s worth noting that clothing store jobs actually lost workers, another sign of the trouble that retail is in — and a sign of potential trouble for low-wage earners. Meanwhile, other sectors with a heartbeat were “administrative and support services,” with 30,000 new jobs, temp services, with 15,000 new jobs, and health care, with 45,000 jobs (home health care jobs top that category).
I keep reading economists, month after month, saying they are puzzled by the stubbornly low wage growth that has dogged this years-long economic recovery. It’s not complicated, folks. Most of the new jobs are in bars and helping older folks.
America is still sick. Middle-class families are still very anxious. In a recent MassMutual study of families earning between $35,000 and $150,000, fully 37 percent report feeling “not very” or “not at all” financially secure. And half say they worry about money at least once each week.
Of course they do.
Stay focused, folks. Don’t be distracted by the colorful graphics and celebrations around Dow 22,000. The stock market is not a scorecard for how America is doing. We can and must do better for everyone, not just investors.
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