Employers added a scant 75,000 new jobs to the US economy in May — far below last year’s monthly average of 223,000 positions, according to the latest jobs report from the Bureau of Labor Statistics.
The sudden drop from April, when the economy added 224,000 (revised down from the initial 263,000 jobs reported), plus slower overall job growth so far in 2019, suggests that the pool of available workers is draining and the US economy is reaching full employment.
The super-low unemployment rate, for example, didn’t budge in May from 3.6 percent. That’s still the lowest rate of unemployed Americans recorded since December 1969.
Yet the small pool of available workers still hasn’t translated to much higher pay: Workers only got an average hourly pay raise of 6 cents in May, the same increase they got a month earlier.
The new jobs report shows that the US economy is continuing to expand, but without middle- and working-class families seeing much of the benefit. Job security is the one advantage employees can count on these days.
Low unemployment and high job creation means that nearly every American who wants to work and is able to has snagged a job by now. And those who lose their jobs, or decide to leave, probably won’t have a hard time finding another position.
Yet millions of Americans are working part-time jobs when they would rather get full-time gigs, or at least work more hours. The number of people in that group has been mostly shrinking but still added up to 4.4 million workers in May.
Most of the new job hiring last month was for positions in business services and health care.
While all the new hiring is good, the numbers are not as great as last year. The average monthly job growth so far in 2019 is about 155,000 (revised down from 164,000), a big drop from the 223,000 positions created monthly last year. The drop isn’t huge; it just suggests that the current labor shortage is making it hard for employers to fill all the open positions.
But with such a tight labor market and rising productivity, workers should expect much bigger pay raises than they’re getting.
Businesses are still being super stingy
Even though Americans are finding jobs pretty easily, they still aren’t seeing the so-called “economic boom” reflected in their pocketbooks.
May was another month with disappointing wage growth.
Private sector workers (excluding farmworkers) got an average 6-cent hourly raise, adding up to an average hourly pay of $27.83. In the past 12 months, average hourly earnings have only increased by 3.1 percent, and that doesn’t even take inflation into account. That’s even slower wage growth than usual.
The latest pay data suggests that workers and labor unions will continue to strike to force businesses to boost wages.
Slow income growth has been the weakest part of the US economy in its recovery from the Great Recession. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded.
May’s 6-cent average hourly wage hike suggests more of the same, despite a surprising 10-cent jump in February.
Over the past year, the cost of food and housing has gone up, so paychecks have had to stretch further. But because of a recent drop in the price of clothes and utilities, the annual inflation rate has fallen to 2 percent, compared to a high of 2.4 percent in 2018 (based on the Consumer Price Index).
So when you take inflation into account, workers’ real wages only grew about 1.1 percent within the past year. That’s even slower than wages were growing earlier this year, and it’s pitiful when you compare it to the sky-high payouts corporate CEOs are getting.
Frustration over stagnant wages is also the major underlying factor behind widespread worker strikes across the country in places like California, Illinois, and Missouri (workers at Vox also recently staged a one-day walkout amid ongoing contract negotiations). In April, 31,000 supermarket employees went on strike in the Northeast to reverse proposed pay cuts and rising insurance premiums. The Stop & Shop strike in mid-April was the largest private sector work stoppage in years. After eight days with empty supermarkets, the company agreed to scrap its plan.
Some economists are confident that wages will start to pick up if this trend continues. “[T]he sharp increase in the number of working days lost to strikes over pay and benefits over the past year suggests that employees increasingly recognize that the balance of power has shifted in their favor,” Ian Shepherdson, chief economist for the research firm Pantheon Macroeconomics, wrote last month in an analysis.
The widespread labor unrest underscores how the Republican tax cuts did little to help working-class families, despite all the promises from congressional Republicans.
In response, voters in some states have forced businesses to give low-paid employees a raise.
In November’s midterm elections, voters in Missouri and Arkansas overwhelmingly approved ballot measures that will raise the minimum wage for nearly 1 million workers across both states. And as a result of the new laws, low-wage workers in 19 states got pay raises on January 1.
Those laws have helped boost wages so far in 2019, but not enough.