The strong growth in the US economy in 2018 is forcing employers to create new jobs at an even faster rate than in 2017. As a result, labor markets are getting even tighter, creating clear upward pressure on wages.
The two most popular wage measures, the Employment Cost Index, released two days ago, and average hourly earnings, released today, broke the three percent threshold in the same week. Wages have been accelerating faster in 2018 than in prior years. We expect wages to accelerate further by about half a percentage point through the end of 2019, as economic growth remains above trend, the labor market continues to tighten, and the other main determinants of wage growth – inflation and labor productivity – may grow faster.
Federal Reserve concerns about inflation will only grow as a result of labor market news this week. They will be more determined to continue raising rates to slow down growth and prevent labor market conditions from causing the economy to overheat and inflation from exceeding the bank’s target.
Kevin Price, host of the nationally Price of Business show and an editor at The Daily Blaze said, “in spite of the high level of rhetoric from the Trump Administration, this is historically low unemployment. There is no doubt there are more people working now than in any time in US History. Economists consider full employment is when unemployment is below 4 percent. We are at that level. That is putting enormous pressure on employers to raise wages and benefits in order to get better employees.”
The Daily Blaze asked Congressman Kevin Brady (R-TX) to weigh in on the historically low unemployment. He is chair of the powerful House Ways and Means Committee. He told the Daily Blaze, in a statement:
“This strong report marks over 2,100,000 million jobs that have been created since our new tax code became law – and that is worth celebrating. Just this last week, we have also seen workers’ pay rise at the fastest pace in a decade, increased productivity, and another strong quarter of growth for America. While Democrats again this week pledged to raise taxes on hardworking Americans and take more money away from Main Street businesses, Republicans know our workers deserve a pro-growth economy like the one we’re seeing that truly works for them. We look forward to building on this success in the 116th Congress.”
The U.S. Department of Labor reported today that the economy added 250,000 jobs in October and the unemployment rate was 3.7 percent.
There is a lot of confusion about whether this is the lowest unemployment numbers the US has ever had. In numbers, there is no doubt, in terms of percentage of the population, probably not. Under the Obama administration the criteria for those considered job seekers changed and thus the number counted as unemployed was reduced compared to historic standards. In spite of Trump’s criticism of that policy, has done nothing to change the measure. Still, these unemployment numbers are the type any politician would relish.