Private sector employment increased by 235,000 jobs last month as the recent tax law helped boost payrolls, according to the latest national employment report from ADP.
Small businesses added 68,000 jobs, including 27,000 in businesses with between one and 19 employees, and 41,000 in companies with 20 to 49 employees. Midsized businesses with between 50 and 499 employees added 97,000 employees. Large businesses gained 70,000 employees, including 11,000 in companies with between 500 and 999 employees and approximately 58,000 at larger corporations with 1,000 employees or more.
The goods-producing sector added 37,000 employees, while the service-providing sector gained 198,000 employees, including 46,000 in professional and business services, such as accounting, tax preparation and other types of services. Franchises added 24,700 jobs last month.
“The labor market continues to experience uninterrupted growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “We see persistent gains across most industries with leisure and hospitality and retail leading the way as consumer spending kicked up. At this pace of job growth employers will soon become hard-pressed to find qualified workers.”
Mark Zandi, chief economist at Moody’s Analytics, which produces the monthly national employment report with ADP, sees a positive impact on hiring from the tax law that Congress passed last December. “The tax cuts are just now starting to hit the economy, and I expect to see the impact on consumer spending take effect in a more pronounced way this spring and summer,” he said during a conference call with reporters Wednesday. “The government spending increases that are coming because of recent legislation will support a lot of growth toward the second half of this year and the first half of 2019. We’re in store for very strong job growth going forward.”
However, the tariff increases recently announced by President Trump on steel and aluminum imports could have a negative impact on jobs, apart from domestic steel and aluminum manufacturers. While U.S. steel and aluminum manufacturers might add between 10,000 and 15,000 jobs at the most, downstream businesses that depend on those products could shed between 50,000 and 60,000 jobs. But the job losses could be even higher, especially if the tariffs lead to a trade war with other countries.
“If we do see a response by our trading partners to the increase in tariffs upon steel and aluminum, then the impacts will increase and if we get into a tit-for-tat trade conflict or even trade war, the costs could be quite significant, hundreds of thousands of jobs under the darkest scenarios,” said Zandi. “Obviously those seem like unlikely scenarios, but these things can take on a life of their own, so it’s something that needs to be watched carefully.”
In terms of wage growth and demographic data, Zandi noted that wage growth for millennials has been particularly robust in the past year, in contrast to baby boomers. "They are experiencing very strong conditions, and the wage gains are very robust and have accelerated," he said. "That’s consistent with the narrative that millennials, 20 to 35 years old, entered the workforce around the Great Recession about a decade ago so they took jobs that were ill suited, low paying, just something that they weren’t comfortable with. Now they have opportunities. There’s a record number of open job positions, and they’re taking advantage of that and they’re catching up. Whatever income they lost during the recession and the weak economic recovery that followed, they have been picking up in a pretty consistent way over the last two to three years and particularly over the last year. The other thing I’ve noticed in the data is that boomers, folks in their 50s and 60s, they’re seeing the job market conditions are good, but the wage growth is low because the level of their wages is already very high."
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access