Wages surge as U.S. adds a robust 250,000 jobs in Oct.
Paycheck boost biggest since 2009
WASHINGTON — U.S. businesses ramped up hiring in October, and wages rose by the largest year-over-year amount in nearly a decade, a combination that is pulling a rising share of Americans into the job market.
In the final major economic report before Tuesday’s congressional elections, the government said Friday that U.S. employers added a robust 250,000 jobs in October. The unemployment rate stayed at a five-decade low of 3.7 percent.
Healthy economic growth is spurring employers to hire at a rapid pace that shows no sign of flagging even with the economy in its 10th year of expansion. With the supply of unemployed dwindling, companies appear to be finally putting up generous enough pay raises to attract and retain employees.
Average hourly wages rose 3.1 percent in October from a year earlier, the fastest annual gain since 2009.
Inflation has picked up a bit in the past year as well, eating away at some of those pay raises. And the increase in wages last month also partly reflected a one-time drop in pay a year ago because of Hurricane Harvey. Even so, October’s increase suggests that after a decade of anemic growth, wage growth is picking up. At the same time, an influx of new job-seekers increased the proportion of Americans with jobs to its highest level since 2009.
The economy has now added jobs for 97 straight months, a record. That steady hiring has helped reduce the unemployment rate for Latinos to 4.4 percent, a record low. Teenage unemployment dropped last month to 11.9 percent, the lowest since 1969. And the proportion of Americans without a high school degree who are working has reached the highest point on records dating from 1992.
Becky Frankiewicz, president of staffing firm ManpowerGroup North America, said companies are trying a variety of strategies to fill jobs. Many retailers are removing the label “seasonal” from their job postings and looking for permanent workers instead. Others are dropping their requirements for a college degree.
The strong job growth and bigger pay increases will likely encourage the Federal Reserve to keep raising short-term interest rates. Most analysts expect the Fed to resume its rate hikes in December.
Although pay increases can help boost spending and propel the economy’s growth, they can also lead companies to raise prices to cover their higher labor costs. That trend, in turn, can accelerate inflation. So far, though, inflation remains in check. The Federal Reserve’s preferred price measure rose 2 percent in September compared with a year earlier, slightly lower than the year-over-year increase in August.