Americans See Enduring Wage Gains as Labor Market Tightens
Daniel Acker/Bloomberg News
After six straight years of annual job gains topping 2 million, America’s labor market is as tight as ever, and it’s entering the next phase: an enduring pickup in wages.
Average hourly earnings jumped by 2.9% in the 12 months through December, the most since the latest recession ended in June 2009, according to the Labor Department’s employment report released Jan. 6 in Washington. Workers in almost every category, from mining and construction to retail and education, saw paychecks rise from November. The 4.7% jobless rate remains close to a nine-year low, even with a tick up in December.
RELATED: Trucking adds 1,400 jobs in December, Department of Labor reports
Job and wage prospects would improve even more after any successful legislation aimed at stirring growth, such as tax cuts and infrastructure investment, as President-elect Donald Trump has promised.
“The trend is clearly moving toward firmer wage growth,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “The labor market is tight and getting tighter. I expect to see continued acceleration in wages this year.”
The encouraging news on worker pay underscores the next stage of the labor-market recovery, which was defined by years of wage stagnation amid strong growth in payrolls. Now, the economy is adding jobs at a slower pace and measures of slack are diminishing, meaning labor shortages may become more common. That makes a sustained acceleration in paychecks critical to boosting household income and supporting spending.
Some cooling in the job market was apparent in the latest report. Payrolls climbed by 156,000 in December after 204,000 in November, and the participation rate increased to 62.7%, which may continue as more people are drawn into the labor force and find work. Other measures of slack improved, including a drop in the number of Americans working part time who would rather have a full-time position.
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|By Sho Chandra|
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