WASHINGTON (AP) – As the US economy has steadily recovered from the Great Recession, the critical missing piece has been a painful lack of pay raises for many Americans.
Their pain may be easing.
Friday’s jobs report signalled that raises have finally begun to flow through an economy in which, once you factor in inflation, most people earn less than when the Great Recession struck in 2007.
The average hourly wage jumped 0.5 per cent between December and January – the sharpest monthly gain since 2008 – the government’s survey of businesses found. The average has now risen 2.2 per cent over the past 12 months to $24.75, comfortably above inflation.
So if you’ve gone without a meaningful raise, should you expect one?
Skeptics still have doubts. But the quickening rate of hiring provides reason to hope.
The government’s figures don’t pinpoint which occupations have benefited most from rising pay. Wages have risen at a slightly slower pace for non-managers, indicating that bosses are pocketing much of the gains. Still, corporate announcements and job postings indicate that wage growth has been extending to a broad range of industries and professions.
Job listings on Indeed.com, for example, show stronger demand for truckers, health care professionals and technology workers, all of which points to higher wages, said Tara Sinclair, chief economist at Indeed.com and a professor at George Washington University.
“America is really getting back to work, and that’s the first step to getting better paychecks,” Sinclair said.
The pace of hiring has accelerated 34 per cent since 2013. That growth has reduced the number of job seekers and made it harder for employers to find talented employees. The trend, the theory goes, has finally forced companies to loosen their grip on pay to attract and keep the best workers.
Employers have added 3.2 million jobs over the 12 months – including 257,000 in January, 329,000 in December and a sizzling 423,000 in November.
Some economists note that pay figures tend to be volatile from month to month and that January’s blowout average increase might be unsustainable. Still, each additional job increases the number of paychecks in the United States, which drives greater consumer spending. And that tends to fuel further hiring and higher wages.
Ford Motor Co has announced that up to 500 of its lowest-paid factory workers will receive a 48 per cent pay raise to $28.50 an hour. Only 20 per cent of its employees can be in the lowest tier, so Ford had to raise wages to hire 1,550 workers to make pickup trucks in Missouri and Michigan. Other major companies, including Aetna and the Gap, have also announced pay increases.
Some smaller firms are enjoying a level of growth that has begun to deliver year-end bonuses and raises.