MARY LOUISE KELLY, HOST:
The job market is still sizzling despite efforts by the Federal Reserve to turn down the heat. Today, we learned that U.S. employers added 263,000 jobs last month. That is significantly more than forecasters were expecting. And the unemployment rate held steady at a low of 3.7%. The surprisingly strong job market is welcome news for anyone looking for work, but it could complicate the Fed's effort to curb inflation, as we're going to talk through now with NPR's Scott Horsley. Hey there.
SCOTT HORSLEY, BYLINE: Hi, Mary Louise.
KELLY: So again, just to emphasize, forecasters were expecting a slowdown in hiring last month. That did not really materialize. Why not? What's going on?
HORLSEY: The job market's proven to be remarkably resilient. Employers just keep adding more than a quarter-million jobs month after month. Growth has slowed a bit from the first half of the year, but it's still really strong, 60% stronger than it was back in 2019, the year before the pandemic. Julia Pollak, who's chief economist at the job search website ZipRecruiter, says this is just a terrific time for anyone who's working or looking for work.
JULIA POLLAK: This remains the greatest job seeker's market of all time. Employers are facing staffing shortages, and they are doing what they need to do to fill vacancies quickly.
HORLSEY: One thing employers are doing is raising pay. Average wages last month were up more than 5% from a year ago. For a while this fall, it looked as if wage growth might be tapering off. But new numbers out today suggest that's not the case. Of course, workers like getting more money in their paychecks, but this is a bit of a headache for the inflation watchdogs at the Federal Reserve.
KELLY: Yeah. And I want to follow on that because I'll speak for workers everywhere and say higher wages - that sounds like a pretty good thing. Why is it a problem?
HORLSEY: The Fed is concerned that employers who are paying those higher wages might pass the cost on to their customers, and that would put even more upward pressure on prices. Fed Chairman Jerome Powell said that's especially worrisome in the services sector, where one of employers' biggest costs is typically wages.
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JEROME POWELL: We want wages to go up. We want wages to go up strongly, but they've got to go up at a level that is consistent with 2% inflation over time.
HORLSEY: And right now wages are rising a good bit faster than that even if prices are climbing faster still. The Fed has been aggressively raising interest rates in hopes that would cool off the job market. So far, there's little sign that's working. And as a result, the Fed may have to raise rates even higher and keep them up longer.
KELLY: Well, and investors have been worried about rising interest rates. How did the market react today?
HORLSEY: Yeah. Stocks dropped pretty sharply out of the gate this morning shortly after this jobs report came out on concerns that the Fed might have to act even more aggressively. By the end of the day, though, markets had mostly rebounded. The Dow Jones Industrial Average actually ended in positive territory. Other big indexes were essentially flat. Investors are still betting that the Fed will opt for a smaller interest rate hike at the next policy meeting in a couple of weeks. Beyond that, we're going to have to wait and see.
KELLY: Any outliers here, Scott, any industries that are cutting jobs?
HORLSEY: We did see a few industries cutting jobs in November. Retailers shed about 30,000 jobs last month. Transportation companies cut about 15,000. Temporary help services have also been cutting back, and that's sometimes considered a bellwether. So it's something to keep an eye on. Of course, we've all seen headlines about layoffs in the tech sector and at media companies. So far, though, the official numbers are not showing any widespread job cuts. The biggest weak spot in today's report really was not a lack of jobs but rather a lack of workers. Ordinarily, in a job market this tight, you'd expect to see people coming off the sidelines to take advantage of those rising wages. Instead, we saw 186,000 people drop out of the workforce in November. Again, that is not the direction the Federal Reserve wants to see. And it could make the fight against inflation that much tougher.
KELLY: NPR's Scott Horsley. Thanks, Scott.
HORLSEY: You're welcome.
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