Employers added a solid 196,000 new jobs to the US economy in March — slightly more than economists expected, according to the latest jobs report from the Bureau of Labor Statistics. But wage growth slowed back to a crawl.
The latest jobs report shows why it’s still a workers’ labor market
Even as the economy slows, companies are still hiring rapidly.
Despite the tightening labor market, workers only got a 4-cent average hourly pay raise in March. A month earlier, wages jumped about 10 cents, the fastest they had risen since 2017.
And all the hiring in March didn’t do much to change the already super-low unemployment rate, which is still 3.8 percent.
The new data shows that the US economy remains strong even though it’s not really booming. For example, average monthly job growth in the first quarter of 2019 was about 180,000, which is lower than the 223,000 monthly average during the same period in 2018. The decrease isn’t alarming; it just suggests that the economy isn’t growing as fast as before, and that the current labor shortage is making it hard for employers to fill all the open positions.
The strong labor market is a good sign for workers. Such a low unemployment rate means that nearly every American who wants to work, and is able to, 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.
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 March, private sector workers (excluding farmworkers) got an average 4-cent hourly raise, adding up to an average hourly pay of $27.70. In the past 12 months, average hourly earnings have only increased by 3.2 percent, and that doesn’t even take inflation into account.
The jobs report does point to a strong and steady economy, though, with the most new jobs created for hospital and ambulance workers, nurses, and software developers.
So even though Americans are finding jobs pretty easily, they still aren’t seeing the so-called “economic boom” reflected in their paychecks.
Wages hardly grew in March
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.
March’s 4-cent average hourly wage hike suggests more of the same, despite a surprising 10-cent jump in February (At first, the labor department recorded an 11-cent increase, but revised it down by a penny).
Over the past year, the cost of food and housing have gone up, so paychecks have had to stretch further. But because of recent falling gas prices, the annual inflation rate has fallen to 1.5 percent, compared to a high of 2.4 percent in 2018 (based on the Consumer Price Index). So when you take inflation into account, workers’ wages grew about 1.9 percent within the past year. That’s much faster than they’ve been growing since the recession started in 2007, but it’s still pitiful when you compare it to the sky-high payouts corporate CEOs are getting.
Frustration over stagnant wages is also the major underlying factor behind widespread worker strikes across the country in places like California, Illinois, and Missouri. Congressional Republicans had promised that their massive corporate tax cuts would help the average worker, but the gains have been meager.
In response, voters in some states have forced businesses to give low-paid employees a raise.
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 new laws, low-wage workers in 19 states got pay raises on January 1.
Those laws have helped boost wages so far in 2019. Next month’s jobs report will show whether a growing labor shortage will force employers to hike wages even faster — and whether that’s enough to ease frustration among workers who still struggle to pay their bills.
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