The optimists are taking great joy in the 100th consecutive month of job creation in the United States – a record breaking streak. Yet even now, 20m jobs later, there are some parts of the US economy that have yet to reflect the positive image projected by the continuous job growth and low unemployment rate.
Mark Hamrick, senior economic analyst at Bankrate.com. was more hesitant. “But the composition of the workforce or employment obviously paints a much more complicated story.” What troubles Hamrick, as well as the central bankers at the Federal Reserve, is the fact that the US economy is now dominated by high skill, high wage jobs and low skill, low wage jobs. Gone are many of the middle skill, middle wage jobs and that, said Hamrick. Take manufacturing for example, where about 25% of jobs have disappeared over the last two decades thanks to globalization and automation.
In December, wages were up 3.2% from a year earlier, their largest gain since 2008 but nothing to boast about. In January growth slipped to 3.1%. According to the Economic Policy Institute (EPI), a left-leaning thinktank, wages would have to grow between 3.5% to 4% for average workers to really feel an impact. A survey found that 62% of employees received no salary increase in 2018 and just 25% were determined to look for a better job this year.
The employers competing to fill empty jobs are supposed to be offering better wages and benefits to attract the best candidates. Low unemployment rate number is also supposed to make workers optimistic about their chances of getting a new, better paying job.
According to Elise Gould, senior economist at EPI.
“A little bit of what happened is that in the recession, employers got a lot more bargaining power and strength because workers really needed to try to have whatever job that they could get and some of that’s left over,” she explained. “Employers think they should be able to get whoever they want at those lower wages. And I think that that will turn around, but it’s surprising that it hasn’t yet given the unemployment rate that we’re at today.”
The unemployment rate only considers people who are actively looking for work. It does not count people who are working part time but want full-time jobs or those long-term unemployed who have stopped looking but are available to work. The rate that does count all of them is called U-6. In January, that number was 8.1% – double the unemployment rate which was 4%.