Employers added 304,000 new jobs to the US economy in January — once again surpassing economic forecasts, according to the latest jobs report from the Bureau of Labor Statistics. Economists had expected only about 180,000 new positions in January.
Job growth in January was phenomenal. Wage growth was pathetic.
The US economy added 304,000 jobs in January, but workers only got a 3-cent average hourly raise.
Meanwhile, the unemployment rate ticked up again, moving from 3.9 percent to 4 percent, in part because of the partial government shutdown, the report states. About 175,000 unemployed workers said they were temporarily laid off. The unemployment rate has been creeping up since November, when it was 3.7 percent.
Both figures are a sign that the US economy remains strong despite recent stock market volatility over economic growth worries and a prolonged US trade war with China. The continued hiring boom also suggests that fears of a looming economic recession are largely overblown.
The latest jobs report is (mostly) good news for workers. Such a low unemployment rate means that nearly every American who wants to and is able to work has snagged a job by now. And those who lose their jobs, or decide to leave, probably won’t have a hard time finding another position. The data also suggests employers may have a hard time filling positions in the future as the labor pool continues to shrink — which could require businesses to raise wages to keep and attract workers.
However, the latest jobs report once again shows little wage growth, which remains the biggest weakness in the American economy. The average US worker hasn’t seen their paycheck get much bigger since the Great Recession, which ended around 2009.
In January, private sector workers (excluding farmworkers) got an average 3-cent hourly raise, adding up to an average hourly pay of $27.56. In the past 12 months, average hourly earnings have only increased 85 cents, or 3.2 percent, and that doesn’t even take inflation into account.
The jobs report does point to a steadily growing economy, though, with the most new jobs created in the restaurant, construction, and health care industries. In fact, US jobs gains in the past two months are far higher than usual. But wages are barely outpacing inflation.
Paychecks hardly grew in January
Slow income growth has been the most persistent problem afflicting the US economy in its recovery from the Great Recession. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded.
January’s 3-cent average hourly wage hike suggests that the trend has not really shifted.
Over the past year, prices rose, so paychecks had to stretch further. When the 1.9 percent inflation rate is taken into account (based on the Consumer Price Index), workers’ wages only grew about 1.3 percent within the past year — a pathetic amount compared to the sky-high payouts to corporate CEOs.
Frustration over stagnant wages is also the major underlying factor behind widespread worker strikes across the country in places like California, Oklahoma, and West Virginia. Congressional Republicans had promised that their massive corporate tax cuts would help the average worker, but the gains have been meager.
Voters in some states have forced businesses to give low-paid employees a raise in response.
In November’s midterm elections, voters in Missouri and Arkansas overwhelmingly approved ballot measures that will raise the minimum wage for nearly 1 million workers across both states. And as a result of the minimum wage laws, low-wage workers in 19 states got pay raises on January 1.
Next month’s jobs report will show whether those raises are enough to boost overall wage growth — and whether that growth is enough to ease frustration among workers who still struggle to pay their bills.
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