America’s labour market: Wage growth surges, just in time for the Trump presidency

Posted: January 6, 2017 in economy
Tags: , ,

Main image: 

THE news that average wages grew by 2.9% in December, the final full month of the Obama presidency, provides more evidence that America’s labour market is heating up. For some time, America has been creating plentiful jobs—2016 was the fifth consecutive year with more than 2m job gains. But wage growth has been weak enough to cast doubt on the labour market’s strength. A commonly cited reason for paltry pay rises was the number of 25- to 54-year-olds—dubbed “prime age” workers—who had stopped looking for work after the recession, and hence were no longer counted as unemployed. Wages, the argument went, would not pick up until they were encouraged back to work.

With the average pay-cheque now growing faster than at any time since 2009—when layoffs of low-paid workers were artificially boosting average wages—that argument is getting harder to make. In fact, 2.9% wage growth may be close to the limit of what the economy can produce without sparking inflation. Prime-age labour-market participation surged in the past year or so, and has now recovered about a third of its fall after the recession. Some of the remaining shortfall is almost certainly structural, rather than something stimulus, such as lower interest rates, can fix. After all, the participation of prime-age men has been falling …

via Economic Crisis


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s