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US workers are experiencing the biggest pay rise in a decade, the Ministry of Labor said on Wednesday, as companies compete for labor costs more than they've ever had before. done in recent years.
The typical worker received a 2.9% increase from September 2017 to September 2018, according to the Labor Cost Index of the Ministry of Labor, a widely monitored compensation measure. Above inflation, this is the largest increase since the year ending September 2008, when wages rose by 3.1%.
Sluggish wage growth has been one of the biggest problems in this recovery, but employers are finally forced to raise their wages to a more normal level, usually seen in good economic times. The unemployment rate is at its lowest level in 49 years and there are more job openings than the American unemployed, forcing companies to fight for available workers.
"Wages are rising as the job market continues to tighten," said Justin Weidner, an economist at Deutsche Bank. "Wage growth should be again above 3% soon."
On Friday, the Labor Department will release the next most-watched pay indicator: the average hourly wage. Many economists expect a rate above 3% for the first time since April 2009.
"What is the temperature on the job market? It's hot enough for employers to earn a little more money for workers to come and work for them, "wrote Chris Rupkey, chief financial economist at MUFG Union Bank, in a note to clients.
[The jobs boom has finally reached blue-collar workers. Will it last?]
As Americans go to the polls for the mid-term elections next week, consumer confidence is at its highest level since 2000, largely because people have the impression that job opportunities are many, the Conference Board Consumer Confidence Survey revealed on Tuesday.
Prices also rose last year, especially for gasoline and rents, but wages far outpaced inflation. Annual inflation was 2.3% in September, according to the Labor Department.
According to a survey by the National Association for Business Economics released this week, only 23% of companies struggled to find staff, down 42% from a year ago.
According to the latest survey of the National Federation of Independent Business, more than half of small businesses say they can find very few or no qualified candidates. Small business owners have announced plans to increase their employees' salaries as quickly as possible since the beginning of the NFIB survey in the 1980s.
[U.S. economy grew at an annual rate of 3.5 percent in third quarter]
Wage growth steadily increased last year, according to the cost of employment index. From September 2016 to September 2017, wages and salaries increased by 2.5%, the Labor Department announced.
Some argued that firms were delaying wage increases because they had to invest more in benefits, but the cost of employment index also tracks benefit costs, which have not increased as much as wages. Benefits increased 2.6% for the year ending September 2018, compared with 2.4% the year before.
President Trump has boasted of the strength of his economy and often likes to boast about the low unemployment rate and steady job growth when he is in the run-up to the mid-term elections. . Economists believe that its policies deserve to be praised for faster growth, but that unemployment has steadily declined over the past eight years and wages are slowly rising.
"It's not about tax cuts. It's the gradual tightening of the labor market that is finally forcing employers to pay more, "said Ian Shepherdson, chief economist at Pantheon Marcoeconomics. "There is no doubt that the trend is on the rise, but we are not exploding. We are still in a phase of gradual and progressive creep. "
Trump has done a lot to bring back blue collar jobs. Although Colombian manufacturing and other occupations are experiencing some of the strongest job creation since the mid-1980s, wages are not rising. Most of the wage growth in the Cost of Employment Index comes from service sector jobs. Wages in the "goods-producing sector" have actually slowed over the past year, notes Michael Pence, US economist at Capital Economics.
For Azoria Morales, a single mother of two boys aged 8 and 10, who works as a housekeeper in St. Louis, Missouri, earns $ 8.50 an hour, but salary increases can not not arrive soon enough. She recently had to replace the alternator of her car, an unexpected expense that forced her to tell her boys that she would not be able to pay them to play in the youth football league this season.
"Putting food on the table is a constant struggle. I was going to school to become a dental assistant, but I was in a car accident that caused me nerve damage in my hand, "said Morales, 28,". " I do my best with what I have. Costs are increasing, but my wages have not kept pace. "
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