Hiring is up, but the pay sure isn't

Although the economy added an impressive number of new jobs in April, Americans are still waiting to get raises. And it looks like that wait will continue. Despite the unemployment rate improving significantly to 6.3 percent from 6.7 percent the previous

Although the economy added an impressive number of new jobs in April, Americans are still waiting to get raises.

And it looks like that wait will continue. 

Despite the unemployment rate improving significantly to 6.3 percent from 6.7 percent the previous month, earnings still aren’t growing much.

If the job market was fully recovered, wage growth would be about 3.5 percent, according to Bank of America Merrill Lynch economist Michelle Meyer.  But, instead, pay is barely moving.  The annual growth rate is just 1.9 percent.

In other words, while there is a job recovery, it looks like a “wageless” jobs recovery.

“We have not reached the point that workers have negotiating power,” said Meyer. 

That fact dampened enthusiasm for today’s employment report despite impressive job creation of 288,000 jobs in April.  If the economy was bringing a lot of people back to work, you’d assume employers would be finding it tougher to find people to hire and would be raising pay to keep people on the job or attract them from other jobs.

But that’s still not the case – probably because there are still plenty of people who would like jobs; but can’t find them.

According to one measure of unemployment, known as the U-6, 12.3 percent of Americans still want better fulltime jobs but have settled for part-time work to bring in some income.  That’s improved from about 16 percent, but still leaves a lot of people underemployed.

Also, it appears that a sizable number of Americans may be discouraged.  They aren’t trying to look for jobs even though they are in their prime working years.  This is measured by what the government calls "participation rate." In April, adults that are participating in the labor force, plunged to 62.8 percent. That’s the lowest level since 1978. 

Some economists have suggested that participation should not be a great concern because Americans are simply aging and are retiring. But Meyer noted that the decline in participation centered on younger people 16 to 24 years old and prime-age workers aged 25 to 54, who typically would be contributing to the nation’s economy through work.

gmarksjarvis@tribune.com 

Featured Stories

CTnow is using Facebook comments on stories. To comment on ctnow.com articles, sign into Facebook and enter your comment in the field below. Comments will appear in your Facebook News Feed unless you choose otherwise. To report spam or abuse, click the X next to the comment. For guidelines on commenting, click here.

CONSUMER COLUMNISTS

Kevin Hunt - The Electronic Jungle

Kevin Hunt: Wanna-Haves For The Tailgater - August 8, 2014 - Back-to-school season usually doesn't deserve a celebration, except by some parents, but it coincides with two other seasons —...

Gail MarksJarvis

In time, S&P 500's milestone will mean little - August 26, 2014 - The Standard & Poor's 500 index, the most commonly used representation of the stock market, made history Tuesday as it crossed over the 2,...

David Lazarus

Adjusting for life in the world of Big Data - August 25, 2014 - The invitation offered a "free gourmet meal exclusively for people with neuropathy symptoms."

Korky Vann

Books Inspiring Global Tours, Journeys - August 3, 2014 - Book lovers who head out to visit authors' homes, museums and gravesites are part of a new chapter in travel called "literary tourism."

Advertisement

...