Insights in Seniors Housing & Care
More than six years into expansion, the labor market continued to add jobs in September. The Labor Department reported on Friday that nonfarm payrolls increased by 156,000 positions in September. Hiring has now averaged 178,000 new positions per month over the past nine months. However, the September gain was less than the 175,000 positions consensus projection and was down from an upward revised gain of 167,000 in August (originally reported as 151,000). The year-to-date average was also down from average monthly gains of 229,000 in 2015.
Job gains were led by the professional and business services sectors and health care. Employment in healthcare increased by 33,000 positions in September. Over the past 12 months, healthcare has added 445,000 jobs.
The unemployment rate rose 10 basis points to 5.0% from 4.9% in August. The unemployment rate is derived from a separate survey than the payroll employment number cited previously. The jobless rate rose for a good reason, however. It increased because the number of people actively looking for work grew more quickly than the number of people who had jobs. Indeed, the increase stemmed from a large 354,000 gain in jobs which was offset by an even larger increase in the labor force of 444,000 positions. Over the past year, the labor force has grown by 3 million people, the largest 12-month gain since 2000. The gains suggest discouraged workers who had dropped out of the labor force may be re-entering, provide a further boost to economic growth.
The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work, rose to a six-month high of 62.9% in September due to the jump in the labor force. Nevertheless, it remains low by historic standards.
Average hourly earnings for all employees on private nonfarm payrolls increased by six cents to $25.79 in September. Over the year, average hourly earnings have risen by 2.6%, stronger than inflation. This measure of wage growth is starting to accelerate. Average hourly earnings increased 2.3% in 2015 and 2.1% in 2014. Increases in minimum wage rates in many states may start to put further pressure on this measure of earnings.
The September jobs report continues to paint a picture of a strong labor market and may add fodder to those within the Federal Open Market Committee (FOMC) who believe the broad economy is strong enough to withstand an additional increase in the federal funds rate. In December 2015, the Fed raised its benchmark interest rate 25 basis points, the first increase since the financial crisis. There has been much discussion of further increases since that time, but there has not yet been one.
Beth Burnham Mace is a special advisor to the National Investment Center for Seniors Housing & Care (NIC) focused exclusively on monitoring and reporting changes in capital markets impacting senior housing and care investments and operations. Mace served as Chief Economist and Director of Research and Analytics during her nine-year tenure on NIC’s leadership team. Before joining the NIC staff in 2014, Mace served on the NIC Board of Directors and chaired its Research Committee. She was also a director at AEW Capital Management and worked in the AEW Research Group for 17 years. Prior to joining AEW, Mace spent 10 years at Standard & Poor’s DRI/McGraw-Hill as director of its Regional Information Service. She also worked as a regional economist at Crocker Bank, and for the National Commission on Air Quality, the Brookings Institution, and Boston Edison. Mace is currently a member of the Institutional Real Estate Americas Editorial Advisory Board. In 2020, Mace was inducted into the McKnight’s Women of Distinction Hall of Honor. In 2014, she was appointed a fellow at the Homer Hoyt Institute and was awarded the title of a “Woman of Influence” in commercial real estate by Real Estate Forum Magazine and Globe Street. Mace earned an undergraduate degree from Mount Holyoke College and a master’s degree from the University of California. She also earned a Certified Business Economist™ designation from the National Association of Business Economists.
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