Unemployment held steady at 3.9 percent last month, while the US economy added 201,000 jobs, according to the August jobs report from the US Bureau of Labor statistics, released on Friday. The numbers of new jobs created in the previous two months were revised downward, however, by 248,000 to 208,000 for June and from 157,000 to 147,000 fro July—a total downward revision of 50,000.
Average hourly earnings rose by 10 cents to $27.16 in August, for a year-over-year gain of 77 cents or 2.9 percent. These numbers indicate that wage growth in the US may finally be accelerating again after years of stagnation despite a tight labor market, the New York Times reported:
Amy Glaser, a senior vice president at the staffing company Adecco, said she had noticed a significant change in employers’ willingness to increase hourly wages. “Now clients are talking in terms of dollars instead of cents for wage increases,” she said. During the busy holiday season, employees often jump from one business to another for an additional 50 cents an hour, Ms. Glaser said. Companies are trying to head off that exodus, she said, by starting seasonal hiring earlier — in August, instead of September and October — and by offering higher starting pay.
One sour note in Friday’s report, however, was that both the labor force participation rate and the employment-population ratio declined by 0.2 percentage points, to 62.7 percent and 60.3 percent, respectively. These figures suggest “an economy running awfully close to its capacity,” Neil Irwin observes at the Times’ Upshot blog:
It’s hard to discern any positive long-term trend in the share of the adult population that is looking to be part of the work force. In mid-2008, more than 66 percent of adults were in the labor force, which fell to 62.7 percent in early 2015. It has bounced around in the three and a half years since, but ended up at the exact same level. There is no obvious positive trend. …
Ultimately, if the economy is going to keep adding 200,000 jobs a month and grow at the kind of boom-time pace that was evident this past spring, it will need a growing work force to fill those jobs and make those goods and services. There’s not too much evidence that there are in fact hordes of younger people currently on the sidelines of the labor market who might soon be coaxed back in.
Irwin also puts Friday’s wage numbers in less flattering context: Wages continue to grow at a historically low rate compared to the years before the Great Recession. Still, the fact that wages are growing suggests to him that “employers are coming up against the limits of the labor force. Just maybe, after years of trying every recruitment technique other than raising hourly pay, employers are starting to turn more to that option.” There is some debate, however, over whether real wages are rising, or if rising costs of living are canceling out the gains seen by US workers.
Organizations are also still looking for ways to improve the employee value proposition without raising wages—a trend we’ve been observing for the past few years. While increasing pay is the most straightforward way to improve employee loyalty, morale, engagement, and retention, SHRM’s Dana Wilkie explains, organizations that can’t afford to raise wages can achieve similar results with more affordable investments in benefits and perks, including less-tangible benefits like work-life balance and flexibility, or even something as simple as recognition and appreciation from managers.
Other new data from the Labor Department also point toward encouraging trends in the US economy, with caveats. Worker productivity increased in the second quarter of 2018 at an annualized and seasonally adjusted rate of 2.9 percent, the Wall Street Journal reported—the highest rate since the first quarter of 2015. That was a significant improvement over the first quarter. Still, overall productivity growth remained sluggish at 1.3 percent year-over-year, the same average annual rate recorded from 2007 to 2017.
Initial unemployment claims fell in the last week of August to 203,000, seasonally adjusted, according to Labor Department data released Thursday, while the four-week moving average of new claims stood at 209,500. Both of these figures were the lowest recorded since December 1969. These indicators are a proxy for layoffs, the Journal’s Sharon Nunn adds, so this suggests that organizations throughout the country are holding onto as much talent as they can.