After several months of weak and deteriorating payrolls prints, perhaps the biggest tell today's job number would surprise massively to the upside came yesterday from Goldman, which as we noted earlier [3], just yesterday hiked its forecast from 175K to 190K. And while as Brown Brothers said after the reported that it is "difficult to find the cloud in the silver lining" one clear cloud emerges when looking just a little deeper below the surface.
That cloud emerges when looking at the age breakdown of the October job gains as released by the BLS' Household Survey. [4]What it shows is that while total jobs soared, that was certainly not the case in the most important for wage growth purposes age group, those aged 25-54.
As the chart below shows, in October the age group that accounted for virtually all total job gains was workers aged 55 and over. They added some 378K jobs in the past month, representing virtually the entire increase in payrolls. And more troubling: workers aged 25-54 actually declined by 35,000, with males in this age group tumbling by 119,000!
[5]
Little wonder then why there is no wage growth as employers continue hiring mostly those toward the twilight of their careers: the workers who have little leverage to demand wage hikes now and in the future, something employers are well aware of.
The next chart shows the break down the cumulative job gains since December 2007 and while workers aged 55 and older have gained over 7.5 million jobs in the past 8 years, workers aged 55 and under, have lost a cumulative total of 4.6 million jobs.
The same chart as above showing the full breakdown by age group - once again the 25-54 age group sticks out.
[6]
But young workers' loss is old workers' gain, as the following chart of total jobs held by those aged 55 and over shows. As of October, there was a record 33.8 million workers in the oldest age group tracked by the BLS - the same workers who, as noted above, also have the poorest wage negotiating leverage.
[7]
Finally, the most disappointing data point in today's report is that while overall labor growth was solid, the participation rate for workers 25-54, was 80.7%, far below is peak of just under 85%, and below the 80.8% at the end of 2014.
[8]
Time for a rate hike?
[9]
