HIR­ING SURGED LAST MONTH IN A BOOST FOR ECON­OMY

The Denver Post - - FRONT PAGE - By Christo­pher S. Ru­gaber

Hir­ing surged in June in a sur­pris­ing show of U.S. eco­nomic vi­tal­ity eight years into the re­cov­ery from the Great Re­ces­sion. But pay gains re­main 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 below last 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, econ­o­mists wor­ried that hir­ing would slow as em­ploy­ers strug­gled to fill jobs from a dwin­dling sup­ply of un­em­ployed work­ers. Fri­day’s data sug­gests com­pa­nies are still find­ing plenty of peo­ple to hire.

That has given econ­o­mists greater con­fi­dence the econ­omy still has room to 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.

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 among blacks 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 of­fer a num­ber of 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 at Moody’s An­a­lyt­ics, said many 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.

John McAuliffe, chief ex­ec­u­tive of Syl­van Learn­ing, a com­pany that of­fers tu­tor­ing to stu­dents from kinder­garten through high school, is hir­ing more teach­ers and ex­pand­ing. Yet it is cut­ting costs to main­tain profits, rather than rais­ing prices.

The com­pany has opened 10 new lo­ca­tions since March, cre­at­ing about 100 jobs, mostly part-time.

“More peo­ple have the abil­ity to af­ford tu­tor­ing for their chil­dren,” McAuliffe says.

But the com­pany sees lit­tle need to raise pay. “A lot of teach­ers look for sup­ple­men­tal in­come,” he said. “We’ve al­ways been able to find them.”

Econ­o­mists fore­cast the econ­omy will ex­pand at roughly a 2 per­cent pace this year, about the same as it has grown since the re­ces­sion ended.

Many busi­ness own­ers are see­ing greater con­fi­dence among their cus­tomers.

Mark Dix, a gen­eral con­trac­tor in Knoxville, Tenn., said he has seen a jump in de­mand for the ren­o­va­tion, paint­ing and home con­struc­tion ser­vices he pro­vides. He em­ploys 15 peo­ple.

“I would hire an­other half-dozen peo­ple to­day if I could find the skilled la­bor,” he said.

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