March 10, 2017
March 10, 2017
By Leah McGrath Goodman
Communications and Marketing
(603) 641-7326 (Desk)
Wage Growth, Not More Jobs, Will be Trump's Great White Whale
In the first full month of employment data since President Donald Trump took office-and judging by his Twitter feed, the president was watching-the U.S. Labor Department announced a 235,000-job increase in nonfarm payrolls for February, marking the 77th consecutive month of gains in the U.S. and clearing the way for the Federal Reserve to hike short-term interest rates next week.
Yes, the economy is strengthening, and it looks as if the jobs data will remove the final hurdle for the Fed to raise the benchmark interest rate on March 15-only the third such hike since the Great Recession. But even as the Fed plans to bump up the interest rates affecting credit cards, student loans and mortgages, Americans are still waiting to see their wages increase. They may have longer to wait. You'll see plenty of headlines Friday about how earnings have "accelerated," but that's only if you're a hawk, a nitpicker-in-extremis or you earn so much money that money is an abstraction. The fact is, average hourly earnings rose 6 cents, or 0.2 percent, in February. And the average annual rate of growth for hourly employee earnings came to 2.8 percent for the month, up from 2.6 percent in January.
Professor Amy Schmidt, an economics expert at Saint Anselm College is quoted in the article: "In other words, a lot of people aren’t working—that includes retirees—and this is weighing on the U.S. economy. “While stabilizing, the labor force participation rate is still historically low at 63 percent,” says Amy Schmidt, professor of economics and business at Saint Anselm College in Manchester, New Hampshire. “Even though the unemployment rate is low, as wages rise, there are plenty of potential workers who can come in from the sidelines.”
Wages also remain under pressure due to “the historically low rate of unionization in the private sector and competition from imported, lower-priced goods,” Schmidt says.