Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – Like the July jobs report, the one for August showed robust growth in the number of employed Americans but also revealed a truly miniscule increase in wages at about the same slow pace as in July.
The U.S. economy added 201,000 jobs in August, revealed the Bureau of Labor Statistics (BLS) over the weekend. The good news was a continuation of a nearly eight-year streak of monthly employment gains. The unemployment rate remained unchanged at a low 3.9 percent.
Average hourly earnings in August inched upwards by a sluggish 2.9 percent compared to the 2.7 percent in July. BLS was dismayed at the absence of vigorous pay hikes during the month despite a surging economy.
The average hourly pay for employees on private non-farm payrolls rose by a measly 10 cents, to $27.16. “Over the month, employment increased in professional and business services, health care, wholesale trade, transportation and warehousing, and mining,” said the BLS.
It noted that average hourly earnings crept upwards by an insignificant 0.3 percent in July month-on-month, a negligible gain of 0.1 percentage point. Year-on-year growth wage growth was unchanged at 2.7 percent.
Some analysts noted that the average hourly earnings increase of 2.9 percent was the highest since April 2009, which also confirms the paltry wages being paid American workers over the past nine years.
The average hourly earnings figure is closely watched as an inflation gauge. The Federal Reserve has been increasing interest rates to guard against runaway cost pressures. Market participants widely expect the Fed to hike its benchmark rate another quarter point in September and likely add one more increase in December.
The August job numbers will encourage the Fed to normalize policy after years of accommodation and money-printing during and after the Great Recession of 2008.
“If we continue to see wage growth move higher, it puts the Fed in play for a fourth rate hike, absent tariff concerns,” said Quincy Krosby, chief market strategist at Prudential Financial. “I don’t think this is going to be the beginning of a downturn in the market, but the fact is there had been other reports leading up to this suggesting wages had been moving higher. Today’s print is indicative of a tight labor market.”
The biggest contributor to job gains was professional and business services, which added 53,000. Heathcare jobs rose by 33,000; wholesale trade rose by 22,000 while transportation and warehousing contributed 20,000. There were 6,000 new mining jobs; 23,000 new construction jobs. On the other hand, manufacturing lost 3,000 jobs.
The labor force participation rate and employment-to-population rate both declined 0.2 percentage points, to 62.7 percent and 60.3 percent, respectively.
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