Jobs Outlook: Steady Gains, Low Unemployment. What About Wages?

This week, the Federal Reserve noted that the labor market has
This week, the Federal Reserve noted that the labor market has "continued to strengthen" and that the economy overall has also been strong.
Matt Rourke/AP

The monthly employment reports are starting to look the same. Jobs are growing. More people are coming back to the workforce. And the unemployment rate is the lowest in decades.

But below the headline numbers, economists continue to look for signs that wage growth, which has been stubbornly sluggish, is finally picking up. So far, they've been disappointed.

On Friday morning, the Labor Department is expected to report that the economy added about 190,000 jobs in July, slightly less than in the prior two months, according to private analysts' forecasts.

And the unemployment rate is expected to inch down to 3.9 percent from June's 4 percent. Before this year, the last time the jobless rate was this low was in 2000.

With the economy at full employment and hiring managers struggling to fill open positions, wages normally would be expected to start rising at faster rate.

But, as NPR's Yuki Noguchi reports, "some economists say that should add up to wage growth rates of about 3.5 percent. Instead, wages are increasing at a 2.7 percent annual rate." And when factoring in the cost of living, those increases look even weaker.

It's no wonder that more jobs are available. The economy picked up dramatically in the second quarter. The 4.1 percent pace — lifted by jumps in consumer spending and exports — was the strongest in nearly four years.

Some economists said those were temporary factors — boosted by the Republican tax cuts and increased export shipments ahead of retaliatory tariffs by China on U.S. agricultural products.

But President Trump called the numbers "very sustainable," adding: "This isn't a one-time shot. ... Next quarter, I think it's going to be outstanding."

This week, the Federal Reserve noted that the labor market has "continued to strengthen" and that the economy overall has also been strong. "Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low," it said.

The central bank decided to keep interest rates unchanged, but it has signaled that it will hike them twice more this year.

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