Wage growth accelerated in January to the fastest yearly pace since the last recession, buttressing President Donald Trump’s claim that years of stagnation are finally ending. The Labor Department reported Friday that average hourly earnings for all U.S. employees on private nonfarm payrolls rose 2.9% to $26.74 in January from a year earlier, the biggest increase since 2009, the year the recession triggered by the global financial crisis ended.
“After years of wage stagnation, we are finally seeing rising wages,” Trump said in his first official State of the Union address on Tuesday. On the other hand, there were 451,000 discouraged workers in January, little changed from a year earlier.
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Total nonfarm payroll employment increased in January by a higher-than-expected 200,000, compared with an upwardly revised 160,000 in December. Economists surveyed by Thomson Reuters had forecast 180,000 new positions in January. The unemployment rate stayed at 4.1%, a 17-year low. Manufacturing added 15,000 positions in January, remaining on an upward trend. The sector added 186,000 jobs over the past 12 months. The percentage of small businesses planning to boost pay is at a 28-year high as a shortage of qualified workers becomes the biggest concern for owners, the National Federation of Independent Business reported Thursday. “Only an increase in the labor force and an increase in the participation rate can provide relief from the impact of labor shortages,” Bill Dunkelberg, the federation’s chief economist, said Thursday in a press release on the group’s survey findings. Twenty-four percent of employers plan to raise worker compensation, the highest reading since December 1989, according to the federation.
Twenty-two percent of owners cited the difficulty of finding qualified workers as their single most pressing business problem, exceeding taxes and the cost of regulation.
During his address on Capitol Hill, Trump said the tax cut he signed into law in December provided relief for small businesses. The next day, the Federal Reserve said in its statement following a two-day policy meeting that the U.S. economy will expand at a moderate pace and the job market will remain strong.