In the years since the Great Recession, the Labor Department’s monthly jobs report has been typically scoured for insights into the plight of the unemployed – which industries are growing? Which are shrinking?
In the report that came out Friday, economists believe they saw some good news for people who already have jobs – namely, wage growth may finally be on the horizon.
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In the high-unemployment period after the recession, employers have felt little pressure to increase wages as there was little threat of employees finding work elsewhere. But with the addition of another 217,000 jobs in May, marking the 51st consecutive month of positive though slow job growth, many economists believe that workers are about to get some of their leverage back.
Paul Ashworth, chief U.S. economist for Capital Economics, said that while wages have not yet begun to rise significantly, “we expect that will be one of the big economic stories in the second half of this year.”
The current rate of growth is quite low by historical standards, hovering at around the 2.1 percent mark, year over year. But economists such as Maury Harris, of UBS, believe they are seeing evidence suggesting that’s about to change.
“Small firms are increasingly reporting wage increases and difficulty finding qualified workers, which suggests eventually increasing wage pressure in average hourly earnings and the ECI,” Harris finds.
Harm Bandholz, chief U.S. economist for UniCredit Research, noted, “[A]verage hourly earnings rose 0.2 percent in May, the most since February. While one swallow does not make a summer, we want to use the opportunity to reiterate our view that the record-low level of short-term unemployed will put some upward pressure on wages before long.”
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The report also marked a somewhat grim milestone for the U.S. economy, noted Jim O’Sullivan, chief U.S. economist with High Frequency Economics. “With today’s report, total payrolls are at a new all-time high, finally reversing all of the declines during the recession…. Of course, employment needs to rise over time, although the unemployment-rate neutral pace is now probably less than 100K per month.”
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