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Financial news today, Feb. 6, 2015: January's job report showed more jobs were added last month – but the reason isn't healthy…
The U.S. Labor Department reported Friday that 257,000 jobs were added last month. January's report capped the biggest three months of job gains in 17 years.
But turns out workers are taking on more gigs.
"A good fraction of the reported January job gains came from people working multiple jobs," Steven Pressman, professor of economics and finance at Monmouth University in West Long Branch, N.J., told Money Morning. "This increased from 4.9% of employment in December to 5.1% in January."
That means those people working several jobs were counted more than once, thus artificially inflating the job gains numbers.
The unemployment rate, however, rose to 5.7%. That was up from 5.6% in December. Forecasts had the rate holding steady.
"One reason for the drop in the U.S. unemployment rate over the past few years is that many people gave up looking for work because they felt that there was no chance they would be able to get a job," said Pressman. "This is typical during any recession. When the labor market and the economy improve, and when people think they have a good chance of getting a job, they re-enter the labor market."
During the early 2000s, the labor force participant rate averaged 66%. Over the last five to six years, it fell to under 63%.
"In December 2014, it hit a recent low of 62.7%," Pressman said. "In January, the rate eked up to 62.9%. This is primarily what pushed up the January unemployment rate. While one month of data is not enough to draw any conclusion, we may be at the beginning of a process where people who have given up looking for jobs are indeed beginning to look for work again."
Pressman also noted that the widely applauded 257,000 jobs added last month is just merely close to the job growth needed to meet demand from a rising population, and to deal with those re-entering the labor force.
Jobs gains aside, the most notable number in the January report was the uptick in wages. Average hourly wages rose $0.12 to $24.75 last month. That followed a surprising $0.05 decline in December.
Will Wage Gains Continue?
While jobs gains were widely touted in 2014, wage growth was notably absent.