Reasons Pay Isn't Rising Much for Many Despite Low Unemployment

Marlene Weaver
July 8, 2017

The U.S. economy added 222,000 jobs in June to surpass expectations, keeping the Federal Reserve on course as it steadily raises interest rates. Although the unemployment rate ticked up from the previous month, it did so because more people joined the work force. In June, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $22.03.

The recovery from the Great Recession is now more than 8 years old - unusually long for an economic expansion - and job growth is naturally slowing, he said. A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 8.6 per cent last month from 8.4 per cent in May, which was the lowest since November 2007. Hiring has averaged almost 180,000 jobs a month this year, only slightly below last year's pace.

"We've added $3.3 trillion in stock market value to our economy, and more than a million private sector jobs", he said during a White House speech announcing the USA was withdrawing from the Paris climate change accord.

The bigger than expected increase in employment reflected sold job growth in the healthcare and social assistance, leisure and hospitality and professional and business services sectors. June wages rose 2.5% compared with a year ago, but analysts had estimated an increase in hourly earnings that was slightly higher, 2.6%.

But the numbers under Trump fall short there too, as the economy added 658,000 jobs during that period.

Economists surveyed by Reuters had been expecting nonfarm payrolls growth of 179,000 and the unemployment rate to be 4.3 percent.

Of course, Trump's five-month record is far better than Obama's first five months, when 3 million jobs were lost. The unemployment number last month was the lowest it's been in a decade.

A Labor Department report shows there were 6 million unfilled job openings in the government's most recent reading, the most since it started keeping track in 2000.

"People are out of practice when it comes to asking for higher pay", said Mark Zandi, chief economist at Moody's Analytics. The report covers roughly 90 percent of the economy, from retail and hotels to accounting, government and construction. But most economists have forecast that growth rebounded in the April-June quarter to an annual rate of 2.5 percent or higher.

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