Add to favourites
News Local and Global in your language
18th of November 2018

Economy



In a Sign of the Economy’s Strength, Jobs and Wages Moved Higher in August

The American economy’s stamina was showcased Friday as the government reported that wages in August sprinted forward at their fastest pace since the recession ended and that the job creation streak extended to 95 months.

But the Labor Department’s latest bulletin also hinted that President Trump’s tariffs could be starting to take a toll on manufacturing jobs.

“What’s worth noting is that even though there still remains a lot of headline noise around politics and protectionism, underneath that, the U.S. economy — and that includes labor markets — is doing quite fine,” said Michael Gapen, chief United States economist at Barclays.

[embedded content]

Employers fattened payrolls by 201,000 jobs; the jobless rate remained under 4 percent, near territory not seen since the 1960s; and average hourly earnings rose by 10 cents, up 2.9 percent from a year earlier.

The manufacturing sector, however, which Mr. Trump has made a centerpiece of his economic and trade policies, registered fewer gains than had been previously thought. The combined addition of 93,000 jobs that the government originally reported for May, June and July was revised down to 62,000. And in August, the sector shed 3,000 jobs. The auto industry, which is particularly exposed to trade, eliminated 4,900 jobs last month after cutting 3,500 in July.

“You could tell the story that protectionism is taking some toll here,” Mr. Gapen said. “In most of the manufacturing indices, all showed a drop-off in new export orders.”

But other analysts warned against drawing too many conclusions from the latest payroll report — which excludes agriculture, an industry that is very vulnerable to trade tensions. While some businesses will keenly feel the effects of tariffs, the mammoth United States economy is primary driven by domestic demand.

“Manufacturing employment creation was still pretty good” in previous months, said Carl Tannenbaum, chief economist at Northern Trust. “The impact of the tariffs that are in place now are annoying but modest in size and limited in scope, though the risk is certainly there. If tariffs broaden, we could see business activity impaired much more significantly.”

Finally, a wage increase

Most of Friday’s report illustrated the economy’s resilience.

“This is the strongest labor market in a generation of workers,” said Andrew Chamberlain, chief economist at the career site Glassdoor.

[embedded content]

The latest figures relieved some of the persistent anxiety about sluggish wages, with an increase of 0.4 percent in average hourly earnings last month. The report most likely helped clear the way for the Federal Reserve to lift its benchmark interest rate this month.

Amy Glaser, a senior vice president at the staffing company Adecco, said she had noticed a significant change in employers’ willingness to increase hourly wages. “Now clients are talking in terms of dollars instead of cents for wage increases,” she said.

During the busy holiday season, employees often jump from one business to another for an additional 50 cents an hour, Ms. Glaser said. Companies are trying to head off that exodus, she said, by starting seasonal hiring earlier — in August, instead of September and October — and by offering higher starting pay.

In Louisville, Ky., where there are many distribution centers, jobs that have paid $12 to $13 an hour are reaching the $15 level, Ms. Glaser said. “The race for talent is just so tight, employers are trying to get any step ahead of their competition,” she said.

At the same time, employers are doing more to develop their work forces.

Customer call centers in the retail and financial sectors are devoting more money to training, Ms. Glaser said. Because of the prevalence of texting and social-media slang, many service agents — who typically earn $12 to $17 an hour, depending on the area and the job — lack the required typing skills and professional telephone style.

Some companies, like Blue Ridge HealthCare in North Carolina, are taking more aggressive steps. Entry-level certified nursing assistants still earn $9 to $9.50 an hour, but the company has focused on training and incentives, said Cindy Cross, the system manager of recruitment and retention.

“There are individuals who really want to go back to school but can’t pay for it,” she said, so the company covers tuition and books, and then guarantees them a job after graduation. If staff members want further training to move up the career ladder, Blue Ridge will pay for that as well, Ms. Cross said.

Harder to get a receptionist job than into Harvard

Low-, middle- and high-skilled jobs all saw some wage growth. Even so, the job market can vary radically depending on what people do and where they live.

“In some occupations — typically those with low-skill requirements and relatively pleasant working conditions — there is a huge oversupply of candidates,” said Julia Pollak, a labor economist at the online employment market site ZipRecruiter.

The listings afford a glimpse of the mismatch between what employers are offering and what workers are seeking.

Over the past year, for example, roughly 68,500 ZipRecruiter postings for administrative assistants attracted over 8.1 million applications, or 118 responses on average for every job. The 136,000 warehouse job listings drew over 9.2 million applications, or 68 per job.

Geography is critical: Lower-wage workers rarely move for a job, so openings in distant places, of course, might not be useful to them. Still, on average, Ms. Pollak wrote in an email, “it is harder (in some sense, at least) to get a job as an administrative assistant, receptionist or warehouse worker than it is to get into Harvard, with its relatively generous 5.2 percent acceptance rate” in 2017.

At the other end of the market, there are severe labor shortages for jobs demanding specialized skills, licensing requirements or tough working conditions. For the roughly 246,000 truck-driver listings on the ZipRecruiter site, there were 12 responses for each job, Ms. Pollak said. For the 237,000 skilled nursing jobs, there were just nine on average.

The biggest wage increases often accompany a job change. “There is a gap opening up between job-stayers and job-switchers,” Mr. Chamberlain of Glassdoor said, with switchers getting raises that are nearly a percentage point greater over the past 12 months, according to the Federal Reserve Bank of Atlanta’s wage tracker. In July 2014, the percentage-point gap was just 0.6.

How tight is tight?[embedded content]

Although the headline jobless rate remained 3.9 percent, a broader measure of unemployment that includes part-time workers who would prefer full-time jobs, as well as discouraged workers, fell to 7.4 percent last month.

Over the past six months, 781,000 part-time workers have moved to full-time jobs.

A more disappointing corner of the report showed a decline in the share of so-called prime-age workers, those 25 to 54, who are working or looking for jobs. This figure dipped to 79.3 percent, from 79.5 percent in July. That is substantially higher than in the depths of the recession, but still below its 2000 level, when it exceeded 81 percent, said Elise Gould, an economist at the left-leaning Economic Policy Institute.

The Labor Department’s report provides only a partial and temporary barometer of the economy. The August estimates will be revised twice in the coming months. Overall job growth for June and July was revised down by 50,000 jobs, bringing the three-month average gain to 185,000.

As some economists warned of pending inflation, others maintained that the job market was not as heated as many employers suggest. Technological advances that replace workers and the availability of cheaper labor abroad have kept wages low, said Robert Frick, corporate economist with the Navy Federal Credit Union. “I still think there’s slack in the work force.”

Experts were also unsure what impact tariffs would have on jobs and the economy.

The issues surrounding jobs, trade and tariffs loom large in some states where Republican and Democrats are struggling to keep or flip congressional seats in the midterm elections.

The administration raised duties on steel and aluminum imports this year. And this summer the government rolled out tariffs on Chinese imports totaling $50 billion. Duties on goods worth an additional $200 billion are poised to go into effect as early next week, and Mr. Trump is threatening more. “I hate to do this, but behind that there is another $267 billion ready to go on short notice if I want,” he told reporters Friday on Air Force One.

Christine McDaniel, a senior research fellow at the Mercatus Center at George Mason University and a former White House senior trade economist, said it was still too early for the effect of the tariffs to show up in the data.

The manufacturing job losses so far are consistent with the historical record, she noted. Steel tariffs imposed by President George W. Bush in 2002, Ms. McDaniel said, were responsible for a net loss of jobs. There was a short-lived steelworker boom that disappeared soon after the tariffs were withdrawn. But the manufacturing jobs that were lost never came back, she said. Many employers invested in automation or other alternatives like offshoring, instead.

“These things take a while to play out, but we know how they played out in the past,” she said.

Read More




Leave A Comment

More News

ABC News: Money

Reuters: Business News

L.A. Times - Business

Economy

NYT > Economy

Home Page

Disclaimer and Notice:WorldProNews.com is not the owner of these news or any information published on this site.