Fi­nally, pay for work­ers across US is climb­ing

Kuwait Times - - BUSINESS -

WASH­ING­TON: US work­ers at con­struc­tion sites, ho­tels and restau­rants have en­joyed solid pay raises in the past 12 months. So have em­ploy­ees of util­i­ties and tele­com firms. Fi­nally, af­ter years of stag­nant pay, more Amer­i­can work­ers are re­ceiv­ing mean­ing­ful raises - a trend driven home by the gov­ern­ment’s Oc­to­ber jobs re­port.

Av­er­age hourly pay surged 10 cents an hour last month to an av­er­age of $25.92, the gov­ern­ment re­ported Fri­day. That’s 2.8 per­cent higher than it was a year ago, the sharpest 12-month in­crease since 2009.

But the av­er­age wage in­crease back in 2009 was mis­lead­ing, propped up in part be­cause em­ploy­ers were shed­ding mil­lions of lower-paid staffers in the after­math of the Great Re­ces­sion. The job mar­ket ap­pears much health­ier now, a sign that the plod­ding seven-year re­cov­ery is now pro­vid­ing some crit­i­cal re­lief for work­ers.

“The main rea­son it took a long time for this to show up is that the re­ces­sion was so deep,” said Stephen Stan­ley, chief econ­o­mist at Amherst Pier­pont Se­cu­ri­ties.

Un­em­ploy­ment is a low 4.9 per­cent. For a sixth straight year, the coun­try is on track to add more than 2 mil­lion jobs. Af­ter years of such steady job gains, fewer peo­ple are seek­ing work. As a re­sult, many em­ploy­ers have felt com­pelled to raise pay to at­tract or keep staff. Some sec­tors of the econ­omy are ex­ceed­ing the na­tional av­er­age for pay raises. Ho­tel and restau­rant work­ers, for ex­am­ple, are earn­ing 4.6 per­cent more than a year ago. Em­ploy­ees in the in­for­ma­tion sec­tor - which in­cludes telecom­mu­ni­ca­tions and data pro­cess­ing - are tak­ing home 5.2 per­cent more. Util­ity jobs are pay­ing 4.2 per­cent more. Con­struc­tion wages are up 3.2 per­cent.

“It’s clear that wage growth is ac­cel­er­at­ing,” said Stu­art Hoff­man, chief econ­o­mist at PNC Fi­nan­cial Ser­vices, who es­ti­mates con­tin­ued gains as em­ploy­ers set their bud­gets for the start of 2017. Still, not all cat­e­gories of em­ploy­ers are hand­ing out big raises. Pay at re­tail­ers is up just 1.4 per­cent this year - just half the in­crease for the econ­omy as a whole. The re­tail in­dus­try cut 1,100 jobs dur­ing Oc­to­ber. But an­a­lysts said that was due mostly to hur­ri­canes and other storms that caused stores to close and lay off work­ers. And re­tail­ers tend to be cau­tious about hol­i­day hir­ing for what is tra­di­tion­ally the busiest pe­riod of shop­ping. This year, stores may be wait­ing to see if spend­ing picks up af­ter the tu­mul­tuous pres­i­den­tial race, which may have dis­tracted or un­nerved some shop­pers.

“They’re ad­just­ing and wait­ing to see what hap­pens af­ter the elec­tion,” said Jack Klein­henz, chief econ­o­mist at the Na­tional Re­tail Fed­er­a­tion, the na­tion’s largest re­tail trade group. “The fun­da­men­tals are there for the abil­ity to spend. This is such an un­usual sit­u­a­tion, given it’s been po­lar­iz­ing.” A sur­vey by the re­tail fed­er­a­tion re­vealed cau­tion among con­sumers be­cause of un­cer­tainty about the elec­tion. From Septem­ber to Oc­to­ber, av­er­age hourly wages fell slightly for rank-and-file work­ers. This sug­gests that wage gains may be fa­vor­ing man­agers in­stead of, say, cashiers. Some re­tail­ers like Wal-Mart, the na­tion’s largest pri­vate em­ployer, may be rais­ing pay for some lower-paid salaried work­ers in an­tic­i­pa­tion of an over­time rule set to take ef­fect Dec. 1. That rule will re­quire em­ploy­ers to pay over­time to work­ers who earn un­der $47,476 a year, a cat­e­gory that in­cludes many store su­per­vi­sors.

But it’s too early to tell for sure, says Mark Girouard, who spe­cial­izes in la­bor and em­ploy­ment law in the re­tail in­dus­try at the Min­neapo­lis-based law firm Ni­lan John­son Lewis. “If this con­tin­ues, then I would say that we are see­ing an im­pact (from the new over­time rule),” Girouard said. Still, the mo­men­tum points to wage growth across the broader eco­nomic spec­trum be­cause fewer peo­ple are search­ing for work. The vast gen­er­a­tion of baby boomers has be­gun re­tir­ing, and the growth of the work­force has slowed. Dur­ing the first month of 2010, there were roughly 5.5 un­em­ployed peo­ple for each job open­ing, ac­cord­ing to gov­ern­ment fig­ures. That fig­ure has since de­clined to 1.3 peo­ple for each job open­ing, thereby strength­en­ing the bar­gain­ing power of work­ers. At the same time, ris­ing min­i­mum wages have boosted in­comes for the low­est-paid work­ers.

The re­sult is that pay is ris­ing for the bot­tom 40 per­cent of earn­ers for the first time since the Great Re­ces­sion, said Joe Brusue­las, chief econ­o­mist at the tax and con­sult­ing firm RSM. But Brusue­las notes that ge­og­ra­phy has also in­flu­enced those ris­ing in­comes. The gains have largely by­passed work­ers in ru­ral com­mu­ni­ties, in­ten­si­fy­ing a dis­con­tent with the econ­omy that has sur­faced dur­ing a bru­tal pres­i­den­tial cam­paign. “Job and wage gains have been dis­pro­por­tion­ately clus­tered in the ma­jor metro ar­eas of the United States which is re­flec­tive of the po­lit­i­cal di­vide around the econ­omy that is likely to be vividly on dis­play dur­ing next week’s elec­tion,” Brusue­las said in a re­search note.

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