Wages Rise as U.S. Unemployment Rate Falls Below 5%
Is the American worker finally getting a raise?
After years of scant real gains despite steadily falling unemployment and healthy hiring, wages picked up significantly last month, a sign the job market could be tightening enough to force companies to pay more to attract and retain employees.
The half a percentage point increase in average hourly earnings in January was the brightest spot in a generally positive Labor Department report on Friday, which showed job creation slowing from the white-hot pace of late 2015 even as the unemployment rate fell to an eight-year low of 4.9 percent.
The last six months were the best extended period for employee paychecks since the recovery began six-and-a-half years ago.
“That gain in average hourly earnings is significant,” said Diane Swonk, an independent economist in Chicago. Sustained increases are still needed to make up for years of stagnation, she added, “but it’s a move in the right direction, and that’s reassuring.”
Economists also said that the new figures suggested that the American economy was holding up well despite a slowdown in China, growing risks in emerging markets and turmoil in the stock market.
“The financial markets are leery,” said Michael Hanson, a senior economist at Bank of America Merrill Lynch, “but the labor market still looks like it’s continuing to grow.”
President Obama, who expressed frustration that he has not received the credit he feels he deserves for the country’s improving economy, said the jobs numbers were further signs of progress.
“After reaching 10 percent in 2009, the unemployment rate has now fallen to 4.9 percent even as more Americans joined the job market last month,” he told reporters at a White House briefing in Washington. “Americans are working.”
Over all, employers added 151,000 jobs last month, a pace that is strong enough to keep soaking up people looking for work if it continues in the months ahead, but a big step down from December’s revised increase of 262,000.