U.S. job growth picks up the pace, but pay still lags
Automobile sales may be slowing, e-commerce is putting the squeeze on brick-and-mortar stores, and overall economic growth is limp. But the labor market has nevertheless managed to charge ahead.
Employers added an impressive 222,000 jobs in June, the government reported Friday. Although the jobless rate ticked up slightly to 4.4 percent, it was because some people who had dropped out of the labor force were lured back.
But the hunger for workers and mounting complaints of labor shortages have raised a vexing question: Why isn’t the heightened demand for workers driving up pay?
“The payroll number is well above expectations,” said Jim O’Sullivan, chief U.S. economist for High Frequency Economics. “It’s pretty clear that the trend in employment growth is strong enough to keep the unemployment rate trending down.” Revisions to earlier estimates brought the monthly average gain since April to 194,000. But year-overyear wage growth plodded along at 2.5 percent.
“The wage numbers are certainly weaker than expected,” O’Sullivan said, “so it keeps alive the whole debate about the relationship between slack and inflation, and how far the Federal Reserve should allow the unemployment rate to fall.”
Many workers have yet to fully benefit from the economic expansion.
“This is not a market we have typically seen,” said Michael Stull, vice president at staffing company Manpower North America. “We have not before seen unemployment drop, low participation rates and wages not move. That tells you something’s not right in the labor market.”
Employers are aware that the pool of workers is shrinking and they are rethinking traditional qualifications like length of experience, Stull said.
At the same time, he said workers were “pushing back a little bit about driving an hour for a $10-anhour job at a distribution center on the outer rim of the city.”
“You need a car for that,” Stull said, “and you can’t have a car on $10 an hour.”
That’s a familiar problem to Tom Thompson, owner of Star Cleaning Systems in Columbus, Ohio. He is looking to add two or three part-time workers. He is offering $9.25 an hour to start, with bonuses and increases for workers who stick around. Running a new company, he said, he cannot afford to pay significantly more.
Professional services showed a healthy gain in jobs last month, possibly reflecting the hiring of new college graduates. Other sectors that showed substantial gains included health care, social assistance and food services.
Rep. Kevin Brady, RThe Woodlands, chairman of the House Ways and Means Committee, said in a statement,”This new report shows positive gains: Job creation came in higher than expected and the labor force grew,” but added, “We have a lot more work to do.”