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U.S. economy adds 2.7 million jobs in 2015, but 5% remain out of work

The last time the U.S. economy registered such a prolonged stretch of impressive job creation, Facebook didn’t exist and Beyoncé was still a member of Destiny’s Child.

For all of 2015, the nation added 2.65 million jobs, capping a two-year, back-to-back gain that was the best since the late 1990s, the government reported Friday.

“I think this really is illustrative of the fact that economic momentum in the United States is still awfully strong,” said Carl Tannenbaum, chief economist at Northern Trust. “In spite of the craziness we’ve seen from Asian markets this week, the fundamentals here at home are still solid.”

The year ended with a particularly strong sprint. In December, employers hired an additional 295,000 people, the Labor Department said, and October and November were revised up by a total of 50,000, pushing the average for the last three months to 284,000.

Meanwhile, at 5 percent, the jobless rate, which was unchanged from the previous month, has fallen by more than half since exceeding the 10 percent mark in October 2009.

Looking ahead, the biggest question is whether overall growth will remain strong enough to keep hiring advancing, or whether turmoil in China and elsewhere around the globe will weigh down the U.S. economy.

Democrats, who are fighting to retain the White House and retake the Senate, would seem best poised to take advantage of the positive economic news. Republican presidential candidates have attacked President Barack Obama and his party’s economic policies, but such criticisms have been muted lately and could lose their sting if the employment picture keeps improving.

Still, many voters continue to express widespread dissatisfaction with their own prospects as well as those of the larger economy. Indeed, the main shadow darkening the latest monthly jobs report was further evidence that wage growth for the typical worker remains sluggish. Average hourly earnings fell slightly in December, leaving the overall yearly gain at a meager 2.5 percent.

“If we take the rise of the outsider as a dominant theme in American politics now, clearly part of that is the general feeling that the recovery has been much slower than it should be, particularly for less educated workers and individuals with lower incomes,” Peter Ireland, an economist at Boston College.

The Obama administration was eager to point to news that the economy is finally gaining significant traction. Josh Earnest, the White House press secretary, began Friday’s daily briefing in Washington by noting that over the past two years, job creation had been the strongest since the last years of the Clinton administration and that the decline in the unemployment rate had been the fastest in 30 years.

He called such trends something “the American people can be justifiably excited about.”

Based on the latest figures, which are still subject to revision, the average monthly gain in jobs last year of 221,000 was up from the 2013 average of 199,000, though short of the 260,000 reached in 2014.

“The remarkable thing is how consistent employment growth has been over the past three or four years,” said Mark Zandi, chief economist at Moody’s Analytics. “That’s quite an achievement.”

Pressure to raise pay at a faster pace will eventually mount, he said.

Analysts noted that wages, which are measured in nominal terms, are better than they might seem at first glance, because inflation fell to such low levels last year. Adjusted for changes in prices, the real gain was roughly 2.1 percent, the highest since the recovery began more than six years ago.

While that is not a bad showing, said Betsey Stevenson, an economist at the University of Michigan and a former member of Obama’s Council of Economic Advisers, most of those gains have occurred at the top end of the wage distribution.

“The middle class has continued to get hammered and what we’ve seen is increasing inequality,” Stevenson said. “That was true in the recovery, and also true prior to the recovery.”

Douglas Holtz-Eakin, a former adviser to President George W. Bush and a former director of the Congressional Budget Office, said that disparity helped explain why many Americans are so discontented with their fortunes.

“Median family income has fallen, not risen, so there’s a great disgruntled-but-employed majority out there,” Holtz-Eakin said. “People want a raise,” he said. “I don’t think raising the minimum wage is the right way to solve this problem but I understand why it might look appealing.”

Holtz-Eakin blamed the anemic growth in productivity, which he said helps depress wages.

Moreover, many Americans have no choice but to settle for part-time work or are too discouraged to keep looking for employment after years of fruitless searching. A broader measure of unemployment that includes these people stayed at 9.9 percent in December. And a relatively low labor participation rate, which barely ticked up to 62.6 percent last month from 62.5, continues to bedevil the recovery.

The wage challenge long predates the recession, said Labor Secretary Thomas Perez. “When I look at the data over the last 40 years, the last stretch where we had respectable real wage growth was in the late ’90s and we had unemployment of 4 percent,” Perez said. “I think we still have slack in this labor market.”

An analysis of long-term changes released this week by the Federal Reserve Bank of St. Louis focused on how automation and the movement of jobs abroad are continuing to reduce the number of middle-skill jobs, like those in manufacturing and production. One result is a labor market that increasingly resembles a barbell, with jobs concentrated at the high- and low-skill ends of the spectrum.

“The picture is clear: Employment in nonroutine occupations — both cognitive and manual — has been increasing steadily for several decades,” the report concluded. “Employment in routine occupations, however, has been mostly stagnant.”

Guarded optimism about the labor market contributed to the Federal Reserve’s decision a few weeks ago to raise interest rates from the near-zero levels, where they had rested since 2008.

Much of Friday’s report seemed to validate that decision.

Unemployment among African-American men, whose jobless rate is typically twice as high as white’s, fell to 8.7 percent from 10.9 percent, the lowest in more than seven years. The jobless rate for women dropped to 4.4 percent from 4.6 percent.

Employment grew most vigorously in professional and business services, which added 73,000 new workers, while the construction industry added an unexpectedly strong 45,000 jobs last month, with at least part of the gain because of unseasonably warm weather.

Sitel, a customer care provider in Nashville, Tenn., has been celebrating its biggest growth in years. Sean Erickson, an executive vice president, said that Sitel hired 7,500 people in the United States last year for sales, customer service, technical support and front-line management positions.

“Where we saw the greatest growth was in financial services, retail, travel and transportation,” Erickson said, with weaker demand in manufacturing and communications. He said the company, with 62,000 employees worldwide, had poured money into employee training.

The company’s success also highlights how much the job market has shifted. One of the biggest areas of growth has come from providing flexible, temporary or part-time employees who can work from home to help businesses quickly scale staff up, or down in response to demand.

It is still scaling up.

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