Don't celebrate the new jobs numbers just yet

By David Shuster / current.com / @DavidShuster

If a tie is like kissing your sister, today's jobs report is like kissing her twice.

In fact, the term "mixed bag" was coined for days like this one.

The Bureau of Labor Statistics reported on Friday morning that payrolls grew by 146,000 in November and that the unemployment rate nudged down to 7.7 percent.

On the one hand, this is the lowest rate in nearly four years, and it comes despite Hurricane Sandy dragging down hiring prospects along parts of the East Coast.

On the other hand, the decline in the unemployment rate was driven by labor force withdrawal. In other words, more people last month gave up looking for work. So it's not quite a destination one should take much satisfaction in.

But there are indications of "solid prospects" and that the overall U.S. economy is expanding at a decent clip. Based on Labor Department revisions to earlier jobs figures, the average growth of job creation this fall has been about 140,000 per month. The housing market and construction industry are showing signs of life, the auto industry continues to add jobs (10,000 new ones in November), factory sector employment is holding steady, and overall payrolls continue to expand even as government payrolls continue to shrink.

If you take that trajectory and add in the report a few weeks ago that corporate profits reached record levels in the third quarter of this year, the picture looks promising.

The problem is that wages aren't keeping up with profit margins. In fact, the disparity between average employee pay and CEO salaries is now greater than at any point in U.S. history.

Stagnant wages helps to explain why some Americans are choosing to stay out of the workforce. Nearly 100 years ago, Henry Ford concluded his company would be more successful and generate greater profits if he paid employees enough to buy Ford automobiles. That basic economic concept seems to have been forgotten by too many companies and CEOs today.

Henry Ford knew he had to double his workers' wages.

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The U.S. economy won't really begin to hum until our political leaders and captains of industry begin a new, aggressive effort to push wages up and give consumers more purchasing power. The payroll report reinforces that even though our economy is on the right track, it could use a boost from working families making and spending more.

(Photo from Getty Images)