Sep 9, 2018

Wage growth takes center stage

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Data: Federal Reserve Bank of St. Louis; Note: Seasonally adjusted; Chart: Chris Canipe/Axios

Wage growth, up 2.9% in August from the year before, was the standout figure in Friday's jobs report.

Why it matters: For almost a decade, weak wage growth has defied the economic recovery and has bedeviled workers. Perhaps no longer, according to Joseph Song, an economist at Bank of America Merrill Lynch. Song predicts this is just the beginning of "better wage dynamics," and it could continue in coming months.

Stagnant wages had become a bit of a paradox: With falling unemployment, companies should have been trying to bid wages higher to retain talent and compete for workers. Now we're close to a wage growth rate we haven't seen in almost a decade, as 2009 was the last time paychecks grew 3% year-over-year.

  • This is another signal that the Fed — which called the lack of wage growth a "puzzle" earlier this year — will stay on track to raise rates at least once more in 2018. Maybe twice more, depending on whom you ask.
  • Wage growth was not isolated to just a few industries: Most sectors showed wages were up from prior months.
  • Workers should feel confident that if they switch jobs, they might find another gig that will pay them even more.
  • But, Song cautions, we have been "head faked" with strong wages before. Some of the uptick in wages could be revised away in coming months.

Go deeper

Wages for typical workers are rising at their fastest rate in a decade

Construction workers holding a rally in the Bronx. Photo: Erik McGregor/LightRocket via Getty Images

Wages for nonsupervisory employees — who make up 82% of the workforce — are rising at the fastest rate in more than a decade, the Wall Street Journal reports.

Why it matters: It indicates that the benefits of a tightening labor market and a time of historically low unemployment rates are finally being passed along to most workers.

Go deeperArrowDec 27, 2019

Unemployment fell to 50-year low in 2019 but wages stagnated

Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

Friday's jobs report missed expectations, but still delivered solid numbers, showing the U.S. economy added well over 100,000 jobs and the unemployment rate remained near a 50-year low.

The big picture: BLS reported that the number of people who were employed part time but would rather be full-time employees declined by 507,000 over the year.

U.S. economy adds 145,000 jobs in final report of 2019

Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 145,000 jobs in December, the government said on Friday, below economists’ expectations of 160,000. The unemployment rate held at 3.5% — a 50-year low — while wages grew 2.9% from a year earlier, the smallest gain since July 2018.

Why it matters: The U.S. job market held up in the final month of 2019, but heads into the election year with a slowing pace of job creation and wage growth.

Go deeperArrowJan 10, 2020