Popular Economics Weekly
The best news in January’s unemployment report was average hourly wages jumped 9 cents, to $26.74. It pushed the yearly increase to 2.9 percent from 2.6 percent, marking the highest level since the end of the Great Recession in June 2009.
Workers pay has risen 3-4 percent during past recoveries, but taken 8 years for it to happen during this recovery from the Great Recession. This has in part to be because minimum wages are finally rising, with California, New York, and other high-cost states pushing the minimum wage to $15/hour in coming years from its current national level of $7.25/hour, which is not even a living wage.
The unemployment rate remained at 4.1 percent and 200,000 nonfarm payroll jobs were added to payrolls in January, a 17-year low. Over the last three months, the U.S. gained an average of 192,000 new jobs. That’s a bit faster than the 181,000 monthly average for 2017, according to Marketwatch.
But there is another reason wages are finally rising above the inflation rate of 2.5 percent. There are still a record number of job openings, which means employers have to bid up wages to retain and/or hire the shrinking supply of available workers.
The Labor Department’s November JOLTS report showed job openings slipping slightly to 5.879 million, but Hires are still near the expansion high set in October at 5.592 million.
“Workers and employers appear in fact to be very cautious, holding onto one another as evidenced by the layoffs & discharge rate, little changed at only 1.1 percent, and the quits rate which was unchanged at a low 2.2 percent,” reports Econoday.
That is the most glaring sign that new workers are needed to maintain economic growth. US population growth cannot keep up with our demand for new workers, as I’ve said before. There is no other way to fill the 6 million job openings reported each month by the Labor Department’s JOLTS report.
Debate on the current House bill that doesn’t include an extension of the Dreamers’ protections was continued for 3 weeks, in the hopes a bi-partisan bill keeping open the door for immigrants from what President Trump considers to be “S***hole”, non-white countries will be passed.
This is important for economic reasons; as well as recognizing that America has always been a land of immigrants. We need to keep a flow of qualified immigrants and their families coming from countries that can provide the workforce America has always needed to grow.
If the worker shortage continues, wages will soon reach the 3-4 percent increase range, but then the Fed has a history of raising interest rates even faster, because they believe it will boost inflation to unacceptable levels; which would stop this recovery in its ninth year. And that would also be unacceptable, since workers have waited a long time to make a living wage again.