Wages, U.S. job to­tal rise; un­em­ploy­ment rate falls

Daily Freeman (Kingston, NY) - - WEATHER -

Work­ers en­joyed their best pay raises in seven years last month as em­ploy­ers added 161,000 jobs, the govern­ment said in the last ma­jor snap­shot of a slow but durable econ­omy be­fore Amer­i­cans choose a new pres­i­dent next week.

Fri­day’s re­port sketched a pic­ture of a re­silient job mar­ket that likely keeps the Fed­eral Re­serve on track to raise in­ter­est rates when it meets next month. Yet the econ­omy re­mains pock­eted by weak­nesses that have left many feel­ing left be­hind on the eve of Elec­tion Day. Job gains have been steady, but pay raises have only re­cently be­come wide­spread. And mil­lions of Amer­i­cans are work­ing part time but would pre­fer full-time work.

In Oc­to­ber, the un­em­ploy­ment rate dipped to 4.9 per­cent from 5 per­cent, and the govern­ment said em­ploy­ers added more jobs in Au­gust and Septem­ber than it had pre­vi­ously es­ti­mated.

An al­ter­na­tive gauge of job­less­ness that counts not only the of­fi­cially un­em­ployed but also the part­timers who’d pre­fer full­time work and peo­ple who have stopped look­ing for jobs, fell to 9.5 per­cent. That’s the low­est point since 2008. Still, it is higher than is typ­i­cal in a healthy econ­omy.

Av­er­age hourly pay took a big step up in Oc­to­ber, ris­ing 10 cents an hour to an av­er­age of $25.92. That is 2.8 per­cent higher than a year ago and is the sharpest 12-month rise in seven years.

“If you wanted to show that the econ­omy is still get­ting bet­ter for the typ­i­cal voter, this re­port gives you what you needed,” said Jed Kolko, chief econ­o­mist with In­deed, the job site.

The pickup in pay fol­lows a sub­stan­tial in­crease last year in earn­ings for the typ­i­cal house­hold. The econ­omy ap­pears to be fi­nally de­liv­er­ing wide­spread raises af­ter years of slug­gish pay gains. With the un­em­ploy­ment rate hov­er­ing around healthy lev­els, busi­nesses are likely hav­ing to try harder to at­tract work­ers.

When busi­nesses are forced to of­fer higher pay, they may raise prices to cover the costs, po­ten­tially boost­ing in­fla­tion. That dy­namic has helped make a Fed rate hike likely in mid­De­cem­ber.

“The only re­main­ing ob­sta­cle to the Fed hik­ing in De­cem­ber would be a sig­nif­i­cant ad­verse fi­nan­cial mar­ket re­ac­tion to the US pres­i­den­tial elec­tion,” Chris Wil­liamson, an econ­o­mist at IHS Markit, wrote in a re­search note.

Fri­day’s re­port said em­ploy­ers added 44,000 more jobs in Au­gust and Septem­ber com­bined than it had ear­lier es­ti­mated. That put re­cent hir­ing in line with this year’s solid, if less-than-ro­bust, pace. In Septem­ber, it had ap­peared that hir­ing was slow­ing.

Amer­i­cans in their prime work­ing years — ages 25 through 54 — ex­tended a re­cent trend of re­turn­ing to work, per­haps drawn by ris­ing pay. More than 78 per­cent of peo­ple in that age bracket now have jobs, the high­est pro­por­tion since Novem­ber 2008, in the midst of the Great Re­ces­sion. Still, that’s down from 80 per­cent be­fore the down­turn.

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