Hiring surges in June, but pay gains are weak
WASHINGTON — Hiring surged in June in a surprising show of U.S. economic vitality eight years into the recovery from the Great Recession. Pay gains remain weak, though, a stark reminder of one of the economy’s key shortcomings.
Employers added 222,000 jobs last month, and hiring in the previous two months was revised much higher. Job gains have now averaged nearly 180,000 a month this year, only slightly belowlast year’s pace.
Unemployment ticked up to 4.4 percent from 4.3 percent, but mostly for a good reason: More Americans started looking for work, a sign of confidence in the economy.
Last month, economistsworried that hiring would slow as employers struggled to fill jobs from a dwindling supply of unemployed workers. Friday’s data suggest companies are still finding plenty of people to hire.
That has given economists greater confidence the economy still has roomto run.
“This balanced pace should enable the current economic expansion to be maintained much beyond the historical norm,” Russell Price, senior economist for Ameriprise Financial, said.
The current expansion is the third-longest on record.
U.S. stocks climbed Friday on the news. Technology and consumer-focused companies led theway.
The Standard & Poor’s 500 index surged 15.43 points, or 0.6 percent, to 2,425.18, while the Dow Jones industrial average climbed 94.30 points, or 0.4 percent, to 21,414.34. The Nasdaq compositejumped63.61 points, or 1 percent, to 6,153.08, the Russell 2000 index of smaller-company stocks advanced 15.02 points, or 1.1 percent, to 1,415.84.
So far, the job market and economy look broadly the same as they did last year, though President Donald Trump has boasted that his policies are accelerating hiring and growth.
The economy’s durability appears to be benefiting more people. The unemployment rate amongblacks fell in June to its lowest level in 17 years, at 7.1 percent. The gap with whites, whose rate was 3.8 percent, persisted. The rate among Latinos dropped to 4.8 percent, the lowest in 11 years.
Even with June’s strong hiring, average hourly pay rose just 2.5 percent from a year earlier. The last time the unemployment rate was this low, wages were rising by roughly 4 percent. Normally, as the number of unemployed dwindles, employers raise pay to attract job seekers.
Economists offeranumberof explanations for why that dynamic hasn’t yet kicked in. One factor: The influx of job seekers last month — who had previously been on the sidelines, not counted as unemployed — might have offset some upward wage pressures. Employers had more applicants to choose from.
Mark Zandi, chief economist atMoody’s Analytics, saidmany workers are too cautious to push for raises, partly because of the lingering effects of the Great Recession, when nearly 9 million people lost their jobs.
And some businesses have decided they can’t raise prices enough to afford meaningful pay raises.
That cycle of limited wage gains and low prices has kept inflation in check.