Many Americans tell pollsters and politicians that they’re angry. Why?
At least part of the answer might be tucked inside the February jobs report, released Friday by the Labor Department. Consider this:
On the one hand, the report was brimming with good economic news. It showed employers added 242,000 workers last month, exceeding most forecasts. It also showed upward revisions for job growth in January and December.
The unemployment rate held steady at 4.9 percent and the labor force participation rate rose by 0.2 percentage point to 62.9 percent, marking the fourth increase in the last five months. U.S. companies have now added 14.3 million jobs over six straight years, a record hiring streak.
That all helped push stock prices higher. By midday, the Dow Jones industrial average was back up over 17,000 for the first time since Jan. 6.
Given all of that, what’s not to like?
How about shrinking paychecks?
Average hourly earnings fell last month — down 3 cents an hour to $25.35. In addition, the average workweek declined by 0.2 hour to just 34.4 hours in February.
To be fair, January was a good month, with wages rising by 12 cents. But then in February, that momentum was lost. Over the past year, wages have risen just 2.2 percent, “well below the 3- to 4-percent wage growth we typically see in normal times,” Andrew Chamberlain, chief economist at Glassdoor, said in his assessment. He attributes employers’ reluctance to boost wages to the rising costs for benefits.
So to recap: On Friday, stock investors got a nice boost, while workers got confirmation that both their wages and hours were lower.
Fortunately for most workers, plunging energy prices have resulted in savings at gas pumps and on heating bills. Those lower expenses have left a few more $20s in wallets at the end of the month.
The combination of greater confidence about the job market and lower inflation means “the consumer outlook remains bright … [and] homebuilders expect better sales conditions ahead,” according to an assessment by IHS Global Insight, a forecasting firm.
The February jobs report supports upbeat assumptions about consumer spending. It shows retailers added 55,000 workers to their payrolls in February. In fact, over the past year, the retail trade has added 339,000 employees. And restaurants and bars added 40,000 jobs in February, growing the sector by 359,000 workers over the past year.
On the homebuilding front, construction jobs rose by 19,000 last month. Employment in that sector is up by 253,000 over the past 12 months, with workers in residential specialty trades accounting for about half of the increase.
Realtor.com’s chief economist Jonathan Smoke said that in light of Friday’s robust hiring data, “we remain confident we will see the strongest spring buying season in a decade.”
If the job expansion can continue at a robust pace throughout 2016, economists say wages and workweeks will rebound — eventually.