The answer isn't really in Friday's jobs report, which showed the nation's unemployment rate dropping to 5.8% in October as the economy added 214,000 new jobs, missing the average forecast of 231,000. The real news in the last couple of reports has been about productivity growth, and that news is increasingly good.
Must Read: Warren Buffett's Top 10 Dividend Stocks
When Wall Street crashed in 2008, business investment collapsed and productivity growth went through its worst three-year stretch since the early 1980s. As Progressive Policy Institute economist Michael Mandel likes to say, productivity is where raises come from, and productivity comes from better factories, software and equipment.
Productivity's collapse is the major reason why inflation-adjusted median household incomes are still more than 4% below their pre-recession peak, according to Sentier Research. Now investment is recovering, productivity growth is doing better (though it still isn't great) and wages should be coming along soon.
"It is possible that inflation-adjusted earnings could rise at the fastest pace since 2007'' by the time the year is out, Joel Naroff of Naroff Economic Advisors wrote Thursday. "That is a clear sign that the tightening labor market is forcing firms to pony up a little more money. "
You might not get that from looking at Friday's jobs report, which said average hourly earnings rose only three cents, to $24.57. That was the softest spot in a report otherwise filled with solid news.
This is the eighth month in nine in which the economy added more than 200,000 jobs. A 12,000-job pickup in construction jobs reflects a lurching but real recovery in the housing market. And boosts in middle-income industries like health care (27,200 jobs) and government employment (5,000) complement the low-wage retailing and restaurant work that led the early stages of the recovery. Also encouraging was the drop of 76,000 in the number of people working part-time because they can't find full-time work.
This week's real news was Thursday's productivity report, also from the Labor Department, which showed productivity rising at a 2% annual rate and hourly compensation having risen 1.4% after inflation in the last year, about double the post-recession average.