Economy sees biggest wage increase in eight years as U.S. adds a robust 200K jobs


WASHINGTON (AP) — U.S. employers added a robust 200,000 jobs in January, and wages rose at the fastest pace in more than eight years, encouraging trends that suggest that the economy may accelerate this year.

The unemployment rate remained 4.1 percent, the lowest level since 2000, the Labor Department said in its monthly jobs report Friday.

The pay gains show that employers are increasingly competing for a narrower pool of workers with the U.S. expansion now in its ninth year. Raises stemming from Republican tax cuts and minimum wage increases in 18 states also likely boosted pay last month. The figures point to an economy on strong footing, fueled by consumer spending and global growth.

“Labor is becoming scarce, and employers have to work to find, retain and train employees,” Diane Swonk, chief economist at Grant Thornton, said. “This is new for many employers.”


The pickup in wages could make it likelier that the Federal Reserve will raise short-term interest rates more quickly in coming months. In anticipation of inflation pressures and of a possible acceleration of Fed rate hikes, investors sent the yield on the benchmark 10-year Treasury note surging after the jobs report was released. The yield reached 2.84 percent, from 2.79 percent before the jobs report was released.

Stock prices also plunged after the jobs report was issued, partly in response to the prospect of higher rates as well as to poor earnings reports from Google’s parent company Alphabet, Exxon Mobile and Chevron. The Dow Jones industrial average was tumbling more than 300 points in midday trading.

In January, average hourly pay rose 9 cents to $26.74 after an even bigger increase in December. Compared with 12 months earlier, wages are up 2.9 percent — the biggest gain since the recession ended eight years ago.

Weak wage growth has been one of the economy’s most persistent shortcomings for nearly a decade. But with fewer workers to hire, some employers are being forced to raise pay.

Many economists credit the Fed’s low-rate policies under Chair Janet Yellen with stimulating enough growth to bolster hiring and wages. Yellen’s final day at the Fed is Friday, and next week she will join the Brookings Institution. President Donald Trump chose not to offer her a second term and instead named Jerome Powell, a former investment banker and Fed governor, to be chairman of the central bank.

Tara Sinclair, an economics professor at George Washington University, said she thought the wage increases in the jobs report still support the case for continuing the Fed’s go-slow approach.

“Continuing with the policy of the Yellen Fed is the right one,” she said. “Slow, measured increases; don’t rush it too fast.”

Roughly 275 companies have announced bonuses and higher minimum wages since the Republican tax overhaul was enacted late last year and sharply cut corporate taxes. Most of those companies awarded one-time bonuses, which typically aren’t included in the government’s calculation of hourly pay.

A key question is whether last month’s gain can be sustained. Other reports also suggest that pay increases are picking up. A quarterly measure of wages and salaries in the private sector, released Wednesday, showed that they increased in the October-December quarter by the most in nearly three years.

Still, the gains aren’t equally spread. A separate measure of hourly wages that doesn’t include managers rose 2.4 percent over the past year, more slowly than the broader figure. That suggests that managers and supervisors have received the biggest benefits.

Hiring was broad-based last month. Construction companies added 36,000 jobs, lifted by demand for new homes and remodeling.

Manufacturers added 15,000, health care 26,000. Professional and business services, which includes highly-paid jobs in engineering and accounting, added 23,000. Restaurants, hotels, bars and entertainment gained 35,000.

Most other recent economic data have also been encouraging. Factories, for example, expanded rapidly in January, according to a survey of purchasing managers, in part because a weaker U.S. dollar and solid growth overseas have boosted U.S. exports.

And many Americans appear confident enough to buy homes: Sales of existing houses reached their highest level in 11 years in 2017. At the same time, would-be buyers are struggling to find suitable homes because so few properties are available for sale. The demand for housing helped lift home building in 2017 to its fastest pace in a decade. Construction companies added 210,000 jobs last year, the most in two years.

Economic growth could reach 2.5 percent to 3 percent this year, some economists have forecast, which would top 2017’s pace.

In this Tuesday, Jan. 30, 2018, photo, Grace Ochoa, of Performance Food Service, right, talks with a job applicant at a JobNewsUSA job fair in Miami Lakes, Fla. On Friday, Feb. 2, the U.S. government issues the January jobs report. (AP Photo/Lynne Sladky)

  • MaineCWP

    For Eight Years The Obama Regime Held The Oconomy and American People Hostage

    • Danny Fitzsimmons

      First of all the GOP thew the economy in the toilet during Bush jr’s term and Obama tried his best to pull it out and it was showing signs of rebounding before the last elections, and there was NO change in taxation in Trumps first term and almost all changes during his first year that was pushed by Trump WILL NOT TAKE EFFECT till this year. Consumer drive fuels the economy. Secondly the push to increase wages WAS FRAUGHT STRONGLY BY THE GOP, sorry you can’t take credit for issues you fight against this is purely a democrat win not GOP. The economy is a win in spite of both parties, however with Trumps war on consumers that surge may be waning as the stock market yesterday took such a dive the worse in two years, and oil and fuel is climbing by the same GOP backers that sent the economy in the tank during Bush Jr’s term once again feel embolden to gouge us at the pumps again.

    • FrankE

      I’m just curious. You seem to have negative feelings regarding Obama, Am I to believe that given all the evidence of wrong doing, his on air vulgarity, and worst of all his constant never ending lies. You support Trump? Or at least feel this country is going in a better direction?
      Given all the information available about Trump, the business tycoon, the reality TV personality and the political failure, it boggles the mind that anyone would allow this clown to have any seat of authority. This entire past year has been a waste, nothing significant was accomplished and we have far fewer regulations required to keep people safe both in the home and in the work place. This has nothing to do with political affiliation, it’s about his unstable mental picture. He will incorporate anything you say in front of him into a long drawn out explanation, about any subject whether he knows anything about it or not.
      I’m just curious how you can just ignore all that and just go with the flow?????

      • MaineCWP

        Time for you to pee in the cup-

        • FrankE

          In the twenty seven years I drove trucks, I had to pee in more cups than I like to think about. Never failed a single test. Can you say the same???????

  • mikemattmic

    Thank you, President Trump.

  • FrankE

    Maybe if they included the bad news, the picture wouldn’t appear so bright. sure a few companies are giving bonuses, but far more companies are not. Pay has increased but at what rate and how is it compared to inflation. Sure fifty bucks a week may feel good at first, then when insurance or something else increases by sixty dollars a week, it’s suddenly not that glamorous.
    More in depth reporting is needed, a balance of the good as well as the bad. Reporting just one point of view is extremely misleading.