April Jobs Report still shows low wages for Americans

The April Jobs Report is beginning to seem like a repeating pattern of low wages, and lowered unemployment rate --- not enough to cause concern on the banner rate, or what we refer to as the marquee rate - and Friday’s 3.9 percent unemployment rate, at first blush made many, especially the Trump Administration - feel elated. But a closer look, revealed the same problem: low wages, or in this case a slight bump of 2.6 percent, or 4 cents, just enough to take a pass on the Mars bar at the supermarket checkout line, and not enough to meet the higher cost of living in the United States.

This conundrum has many economists, observers and Wall Street scratching their heads at what is obviously a reversal of economic standards, where wages, in this cycle should be going up.

The modest uptake can be taken several ways say some: peak age workers still in the job market, and depressing wages, that might otherwise increase with younger workers; difficulty in getting quality workers with requisite skills; the decrease of unions and their influences; and a tight labor market.

“There are more than 6 million unfilled job openings in the United States, near a record. The number of people quitting jobs is also historically high, as workers leave for better [paying] jobs,” noted CNN in their coverage.

Others are attributing good news to the continued increase in jobs being added to the economy, regardless of whether wages are low, high, or in the middle. An example of this is Catherine Barrera, chief economist of the online job site Zip recruiter, who says, “We’ve continued to add jobs every month for so long, and the unemployment rate have reached is amazing,” reported The New York TImes.

The economy added 164,000 jobs (190,000 were expected) and shoved the unemployment rate below 4 percent for the first time in 17 years.

Unchanged is the timetable for rate increases by The Federal Reserve, on track for three more increases this year. But, the worry continues, as observers foretell a drop in consumer spending, a leading economic driver of the United States economy, and needed to counteract higher prices, especially those now seen at the gas pumps.

The Fed did have to look at inflation, which as Market Watch reported, “After its policy meeting this week, the Fed downplayed inflation concerns, even though its favorite inflation gauge, the personal consumption expenditure price index, rose to a 12-month rate of 2%, hitting the Fed’s target for the first time in a year.”

“They did as little as they had to do to acknowledge that inflation had moved up,” and signaled they would allow inflation to temporary overshoot its 2% target, Omair Sharif,  senior U.S. economist at Societe Generale said.

The Fed  may have to revise its own long held definition of what full employment looks like, if this trend continues.

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Back to wages: contrasted with the early 1990s and 2000s, the last time that the picture looked like this, wages rose by 4 percent for rank-and-file workers.  But, Barrera also told the Times, employers got stuck in their ways, and since they did well, with  less help during the Great Recession, they are reluctant to hire, if they can get by with current staffing levels.

Looking in the opposite direction are those that mostly see the glass half full:  "Getting down to 3.9 is quite a marker," said Robert Frick, chief economist with Navy Federal Credit Union, who also noted in his interview, that he believes that an increase in wages, and benefits, will lead to another sharp decrease in the unemployment rate.

He also said, in another interview that “We need wage increases well above 3 percent for consumer spending to accelerate at a healthy pace,” supporting economist fears.

One group not seeing great gains are blacks, whose unemployment rate of 6.6 percent, while the lowest on record, since 1972, is dismal when compared to whites at 3.6 percent. If this seems so, and experts say, that the trend will continue, and that differences in education and degrees don’t seem to matter; then sadly, even a generation later, after the Civil Rights legislation of the mid 1960s, their economic future looks bleak.

The usual areas made the following increases: Health care added 24,000 jobs in April and 305,000 jobs over the year, employment in mining increased by 8,000 last month, and mining employment has risen by 86,000 since a low in October 2016, and construction added 17,000 jobs last month,” reported The Hill.

Martha Gimbel, director of economic research at Indeed, said that the U-6 rate — the broadest measure of unemployment — dropped to 7.8 percent in April, the best showing since July 2001,” she told the Hill, and also issued a cautionary note, “However, the percent of the labor force that is working part-time for economic reasons has been hovering around 3.1 percent for a few months, which may mean that recovery in this measure is stalling out.”
 

We have seen that in previous months, and seeing it again, tells us that while this may be the byproduct of an end-stage recovery, as Gimble puts it, it’s still, for this report, a mixed bag, and furthermore, that life, beyond the numbers, continues to show a deep cause for economic concern, if not worry.