While memories of the recent recession have been fading in the wake of positive numbers about job growth, the United States Labor Department tempered the relief yesterday when, according to The New York Times, they released numbers showing that the employment cost index — a combination of wages, salaries and benefits — rose only 0.7 percent from April to June.
Wages and salaries alone rose a mere 0.2 percent, the story said.
According to the Times, the 0.7 percent growth was the slowest quarterly pace “in 33 years”.
U.S. wages and benefits grew in the spring at the slowest pace in 33 years, stark evidence that stronger hiring isn’t lifting paychecks much for most Americans.
The Times article said that the employers have added 3 million jobs this past year, reducing the country’s jobless rate nearly a full percent since this time in 2014.
Bloomberg reporters Michelle Jamrisko and Jeanna Smialek dug a little deeper into the numbers in their article yesterday. The slow growth in wages, salaries and benefits was particularly prevalent in “sales jobs” and “workers in the Northeast,” they wrote.
The slowdown in pay gains was particularly large among sales jobs, workers in the Northeast and those who received incentive pay such as bonuses, all categories that had shown outsized increases in the first quarter.
Jamrisko and Smialek noted that the slow increase in wages may be affecting consumer confidence, which has been brimming above 90 for 17 straight months, a streak the nation hasn’t seen since 2005.
The article consulted Michigan Survey of Consumers Director Richard Curtain, who was quoted as saying the slow wage growth is a “sore point.”
This really remains a sore point for consumers and will continue to hold down the overall rate of growth in consumption.
Both the Times and Bloomberg articles pointed out that more jobs, regardless of the rate of wage increases, may mean the Federal Reserve will raise interest rates.