Don't Run Out For Caviar Yet, But Wages Are Heading Higher
Friday's monthly employment reportwas encouraging — but not just for job seekers. People who already have work could find something to celebrate too: Hourly wages rose at a decent pace.
That's a welcome change for employees who have seen only very, very modest raises in this economic recovery.
The Labor Department said average hourly wages rose by 9 cents an hour in February, up to $24.31. With that bump, workers are now making 2.2 percent more per hour than they were a year ago.
That may not sound like run-out-and-buy-caviar news, but at least the wage growth is exceeding the inflation rate of 1.6 percent. That means people who work now have a little more purchasing power, and that eventually could ripple out to retailers, car dealers and others.
The higher wages "will support a decent gain in consumer spending in March and April," Stuart Hoffman, chief economist for PNC Financial Services, said in his analysis.
During the worst of the Great Recession and slow recovery, there were stretches when wages didn't rise even by a single penny from month to month. So a 9-cent jump during a period of low inflation is a meaningful change.
Linda Barrington, who heads the Institute for Compensation Studies at Cornell, wrote an assessment saying February's wage increase is an encouraging sign for the economy. But she cautioned that workers will need to see steady gains over several months before they can feel more confident.
"It's only when the labor market recovery consistently shows up in faster-rising paychecks, that we'll start to feel like it's a recovery," she said.
The Labor Department said that in February, employers added 175,000 workers. Most economists had been predicting only about 150,000 new jobs, so the report was widely interpreted as good news.
And this was another bright spot in the report: The size of the labor force grew by about 264,000. Economists say that means more people are feeling optimistic enough to try to find jobs. So the number of people classified as "discouraged workers" declined to 755,000 last month, from 837,000 in January.
Another hopeful sign: Construction companies added 15,000 jobs even though the weather was horrible in much of the country in February. That could be a positive indicator for the construction sector once the weather warms.
The bad weather appears to have hurt some retailers, and the sector lost about 4,000 jobs. But those new construction jobs bolstered their spirits.
Merchants "are encouraged by the growth in construction jobs and building material employment last month, which suggests a forthcoming improvement in residential and nonresidential spending along with household and business confidence," Jack Kleinhenz, chief economist for the National Retail Federation, said in a statement.
Copyright 2021 NPR. To see more, visit https://www.npr.org.