WSJ Editorial Board
Business hiring increases as policy damage from Washington ebbs.
Friday’s buoyant jobs report for November put a coda on the most promising month for the economy in years. First Republicans added control of the Senate to their dominance of the House with enough seats to drive a renewed growth agenda. Now the jobs report reveals a hiring pace that reflects new business confidence.
The slow-growth recovery since 2009 has had jobs fillips before, only to disappoint later, but it’s hard to find much to dislike in November’s report. The economy created 321,000 new jobs, and only 7,000 came from government. Nearly all parts of the private economy contributed, including 28,000 new jobs in manufacturing. With total upward revisions of 44,000 in September and October, the economy has added 2.7 million jobs in the last 12 months.
Also encouraging is that wages rose at a faster clip, with average hourly earnings rising nine cents to $24.66. Wage increases year over year were 2.1%, which remains historically low, but the November gains are a glimmer that rising job prospects are beginning to flow to workers in bigger paychecks.
Those paychecks and prospects lured another 119,000 Americans back into the work force, which is the main reason the unemployment rate held at 5.8% despite the healthy jobs gains. The labor participation rate didn’t budge from a sickly 62.8%, but if job creation continues at this pace more people will return to work. One hopeful sign: Those saying they were working part-time for economic reasons fell by 177,000, and the jobless out of work for 27 weeks or more fell by 101,000. A rising tide lifts even the long-term unemployed.
The best news would be if this jobs trend signals renewed confidence by employers in the prospects for economic growth. The last two quarters were robust (4.6% and 3.9% in annual GDP) and would represent the strongest growth since the mid-2000s if the pace continues. The declines in oil prices, and thus gasoline, may be giving consumers a boost that will further encourage business investment and hiring.
Then there’s the potential lifting of the long Washington pall. For years the economy has had to face a policy bias toward imposing ever-higher costs on private business. You know the litany: the 2007 energy bill, ObamaCare, Dodd-Frank, burdens on fossil fuels, higher taxes, and so much more.
The GOP House that was elected in 2010 delayed a tax increase but President Obama ’s re-election imposed it in 2013. His Administration’s rule-by-regulation continues, but at least Congress will do no more harm.
The key point is that for the first time in years Washington may even have a growth bias. Congress will attempt to reform the business tax code, ease or repeal regulations, reduce the burdens of ObamaCare, and otherwise remove barriers to job creation. It’s impossible to know how much will pass while Mr. Obama is still President, but some pro-growth measures are likely to make it through.
The psychological effect of this change shouldn’t be underrated. American business has been hunkered down for years, even with a rising stock market and near-zero interest rates, because CEOs haven’t known what damage Washington might do next. Now the main question is what good might happen.
With Congress mostly checking Mr. Obama, the biggest remaining policy uncertainty is when and how quickly the Federal Reserve will continue its march back to monetary normalcy. The Fed ended its new bond-buying in October, and the economy survived. Our guess is the same would happen if the Fed raised rates slowly from the near-zero-bound.
It’s hard to believe, but the Fed first hit zero six years ago this month. More months like November and even the current Board of Governors might decide it can finally move.