As life for workers, wages in U.S. climb 2.9%

WASHINGTON – U.S. workers are seeing the largest nominal wage increase in a decade, the Labor Department reported Wednesday, as they have been working in the United States.

Wages rose 2.9 percent from September 2017 to September 2018, according to the Labor Department 's Employment Cost Index, a widely watched measure of pay that does not take inflation into account.

That 's the biggest increase – when the year ended in September 2008, when rose 3.1 percent.

When adjusted for inflation, they are higher, and they are higher, according to the Employment Cost Index. In those years were only growing in a range of 2 percent to 2.5 percent a year, but inflation remained low.

They are rising in the past year, but they are outpacing inflation by a significant margin. Annual inflation was 2.3 percent in September, according to the Labor Department.

Sluggish pay growth has been one of the biggest problems in this recovery. Unemployment is at a 49-year low and there are more jobs than unemployed Americans, which forces companies to fight for available workers.

"Just said Weidner, an economist at Deutsche Bank. "Wage growth is likely to be over 3 percent again soon."

A separate report Wednesday completed businesses added 227,000 jobs in October, a sign that businesses can still find workers with 49-year lows.

ADP payroll processor reported jobs in manufacturing, retail, construction, transportation, leisure and professional services. October's hiring was strongest in eight months.

The unemployment rate fell to 3.7 percent in September, the lowest level since 1969. Businesses are staffing up a fast pace in response to healthy consumer spending and strong economic growth.

That is forcing more companies to raise pay to attract and keep workers.

On Friday, the Labor Department will be the most widely watched metric: average hourly earnings. Many economists expect that will be above 3 percent for the first time since April 2009.

"How hot is the labor market?" Wrote Chris Rupkey, chief financial economist at MUFG Union Bank, in a note to clients.

As Americans head to the polls for the midterm elections next week, the audience is at the highest level since 2000, the Conference Board 's Consumer Confidence Survey showed Tuesday.

They are not having any trouble hiring, down from 42 percent a year ago, according to a survey by the National Association for Business Economics released this week.

More than half of small businesses say they can find, if any, qualified for their open positions, according to the latest National Federation of Independent Business Survey. Small-business owners say they plan to increase employee compensation in the coming months at the fastest rate since the National Federation of Independent Business Survey began in the 1980s.

Wage growth has been steadily rising in the past year, according to the Employment Cost Index. From September to 2016 to September of 2017, wages and salaries rose 2.5 percent, the Labor Department said.

Some have argued that they are having an increase in the cost of benefits because they have not been able to pay for them. Benefits grew 2.6 percent in the year ending in September, compared to 2.4 percent in the prior year.

President Donald Trump has taken over all of the low growth and solid job growth he wants on the campaign trail ahead of the midterm elections. Economists say his policies for the sake of growth, but unemployment has fallen steadily for eight years and wages have been inching higher.

"It's not about the tax cuts," said Ian Shepherdson, chief economist at Pantheon Marcoeconomics. "There is no question the trend is rising, but we are not exploding." We are still in a phase of gradual, incremental creep.

Trump campaigned heavily on bringing back blue-collar jobs. While manufacturing and other blue-collar professions are some of the fastest growing jobs since the mid-1980s, pay is not rising. Most of the wage growth in the Employment Cost Index is coming from service-sector jobs. Michael Pence, senior U.S. economist at Capital Economics.

For Azoria Morales, a single mother of two boys, ages 8 and 10, who works as a housekeeper in St. Louis earning $ 8.50 an hour, can not come soon enough. She recently had to replace the alternator on her car, an unexpected expense that meant that she would not be able to pay for it.

"Putting food on the table is a constant struggle, I was going to school to be a dental assistant, but I was in a car crash, resulting in nerve damage to my hand," said Morales, who is 28. "I do the best I can with what I have .. Costs keep going up, but my wages have not kept pace. "

Information for this article was contributed by Heather Long of The Washington Post; by Christopher Rugaber of The Associated Press; and by Shobhana Chandra of Bloomberg News.

To Section on 11/01/2018