Average hourly earnings hit $24.96 in May, an increase of 2.3 percent over May 2014. We’ve been tracking nominal wage growth
over the recovery and at best we can find reason for only a very modest celebration. 2.3 percent growth is a move in the right direction, but it’s nowhere near the 3.5 to 4.0 percent growth we expect in a healthy labor market.
The weak labor market has sidelined millions of “missing workers,” or potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. An increase in optimism about the labor market leads to more people actively seeking employment.
Yes, this morning’s jobs report had some welcome news. Payroll employment was up 280,000 jobs, slightly above the trend of the previous six months.
This morning’s jobs report shows a solid increase in payroll employment, with 280,000 jobs added in May—slightly higher than the previous six month average of 260,000.
In tomorrow’s release of the Employment Report, I’m primarily looking for evidence confirming that the Federal Reserve should continue to stay the course through its June (and most likely September) meeting. I’ll also be looking more closely at the labor market for young people: youth entering the labor market in the summer and prospects for recent high school grads.
Today's young college graduates face a more challenging labor market—higher unemployment, higher underemployment, and lower wages—than their older siblings did before the Great Recession. While wage stagnation is not unique to the newest labor market entrants, what is particularly stunning is the fact that stark wage disparities between men and women occur even at this early part of their careers.
The erosion of collective bargaining has been a key factor undermining pay growth for middle-wage workers over the last few decades.
The fact is that wage and income inequality didn’t happen by accident; they are the result of intentional policy decisions that have shifted bargaining power away from workers. So along with fighting to alleviate poverty through a stronger safety net, we should use all the tools available to raise America’s pay and raise Americans out of poverty.
Due to the progression of the economic recovery and a modest improvement in the unemployment rate, members of the Class of 2015 currently have better job prospects than the classes of 2009–2014. However, the Class of 2015 still faces real economic challenges, as evidenced by elevated levels of unemployment and underemployment, and a large share of graduates who still remain “idled” by the economy.
That the poverty rate has remained stubbornly elevated over the last three-and-a-half decades is simply a symptom of an increasingly unequal economy, marked by nearly stagnant hourly wages for the vast majority of the American workforce.
Applying EPI's family budget thresholds to Census Bureau data on Denver shows that many—indeed, more than 40 percent—of the region’s residents are struggling to achieve economic security. As policymakers in Denver consider measures to raise incomes for area residents, they should be fully aware of just how far many in the community are from this benchmark.
Despite what some policymakers and pundits might have us believe, a significant share of the poor work. This means that policies that boost employment and wages are important and underappreciated tools for reducing poverty.
Nominal wage growth’s failure to significantly increase over the last several months (and years) is evidence enough that there’s sufficient labor market slack to convince the Federal Reserve to keep its foot off the economic brakes and not increase short-term interest rates.
This morning’s Job Openings and Labor Turnover Survey (JOLTS) report rounds out the employment situation for March. Last week, we saw substantial downward revisions to payroll employment, revisions that exposed one of the slowest job gains in recent years.
When the latest jobs report comes out this Friday, we’ll be watching to see if the recent slowdown in job creation is just a blip or if it's a new trend.
Over the last year, and, in fact, over the last five years, nominal wage growth has been slow—slow by historic standards and slow relative to wage growth that would be consistent with the Fed’s 2 percent overall price inflation target.
Wages in "right-to-work" (RTW) states are 3.1 percent lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic factors as well as state macroeconomic indicators. This translates into RTW being associated with $1,558 lower annual wages for a typical full-time, full-year worker.
EPI senior economist Elise Gould talked with NPR’s “On Point” about “Cadillac” health care plans under the Affordable Care Act.
Watch the video
The main problem in the labor market is a broad-based lack of demand for workers—not available workers lacking the skills needed for the sectors with job openings.
The hires, quits, and layoffs rates all held fairly steady in the February Job Openings and Labor Turnover Survey (JOLTS) report.
The employment situation for March showed downward revisions to payroll employment in both January and February and a considerably slower growth in jobs in March.
As I wrote earlier today, while it may be too soon to sound the alarm, this morning’s Employment Situation Report should give us pause.
Hardcore fans of EPI’s labor market indicators will notice a change today. Our estimate of the number of “missing workers”—potential workers who are no longer classified as in the labor force but who will likely be working or looking for work if the labor market improvement continues—has been revised.
The recent budget negotiations in Congress are a reminder that policymakers can actively slow (or if they choose, speed up) recovery by depressing (or increasing) demand.
It’s too soon to sound the alarm, but this morning’s Employment Situation Report report should give us pause. 126,000 jobs created in March and the downward revision of 38,000 jobs in February, together make for disappointing top line numbers.
As another Jobs Day approaches, there are a few things I’ll be thinking about and watching for: the top line payroll employment numbers and whether the February number will get revised downward (because of the weather); the effect that proposed budget cuts could have (and the harmful effects that austerity has had so far on the economic recovery); whether more people enter the labor force in March as job opportunities appear to be on the horizon and what that does to our missing workers number (and the official unemployment rate); and, of course, what’s happening with nominal wages (and the patience of the Fed).
EPI’s Elise Gould talked with Betty Liu of Bloomberg TV about the importance of raising the minimum wage.
Watch the video
This post originally appeared in the New York Times Room for Debate forum on March 12, 2015.
“Right-to-work” laws deny unions the money they need to help employees bargain with their employers for better wages, benefits and working conditions.
More than half of Los Angeles families do not earn enough income to attain the modest but secure standard of living defined by EPI’s Family Budget Calculator.