Walnut Street Finance Blog

March Jobs Report: Continued Hiring Doesn't Translate to Wage Increase

Posted by Bobby Montagne on Apr 14, 2018 4:38:29 PM


According to The Wall Street Journal the United States added 103,000 jobs last month – this number was below expectations of 178,000. Overall, the unemployment rate held at 4.1 percent and hiring remained strong.

What does this all mean?

Overall, hiring is steady; however, the slight rise in wages is not enough to attract new employees. The average hourly earnings, for all private-sector workers, increased merely 2.7 percent in March. Even though wages are increasing quicker than they have in the past, ultimately the rates are below average.

Most raises are awarded to those in management and supervising roles. The wages for non-supervising positions was 2.4 percent - this percentage has remained the same since December 2017. Employers have decided to push back on wage gains, since many of their new-hires were part of the unemployed labor pool.

As the economy has progressively improved, employers have realized there are a lot of people in the American labor market needing jobs. Stan Henry, owner of East Coast HVAC, said, “A lot of smaller businesses rely on Labor Ready facilities because they are able to pay a standard wage pre-set by those professionals and their affiliated organizations. I like to think that I pay my workers a respectable wage. However, the initial raises are awarded to my supervisors in the field.”

For construction, the numbers in March 2018 remained stagnant and only declined by 15,000 – this following a big gain in February 2018 of 65,000.

“I encourage my employees to seek out advancement classes offered at local community colleges and vocational schools,” Henry added. “I am much more likely to pay more for an employee who has skills that are out-of-the-norm. It makes an employee much more desirable because they have more to offer.”

Area development, within various locales, is another big component concerning and effecting wages. As of 2017, the U.S. Census Bureau reported that 325.7 million people are in the United States of America – that number is continuing to climb. This steady incline contributes to the development of various cities and states. More people correlates to a higher demand for housing and expansion.

While the development is great for the economy and produces more jobs ultimately, the continued existence of work means there is a large pool of potential employees. The Tennessean reported, in 2017 and confirmed this is still true in 2018, that 100 people are added to the Nashville population each day. This number includes births, deaths, and people moving in and out. Other cities such as Austin, TX, Raleigh, NC, and Charlotte, NC are seeing similar growth. This bodes well for the construction and real estate industry, since more people translates into more homes and development. But, again this doesn’t mean higher wages for employees. This outcome contradicts the traditional supply and demand approach.

What does all of this mean for everyone as a whole?

In March, average hourly earnings for private non-farm payrolls rose to $26.82; however, over the year the average hourly earnings increased by 2.7 percent. While hourly earnings for private-sector and non-supervisor roles increase to $22.42.

The unemployment rate, in March, was 4.1 percent for the sixth consecutive month. The number of unemployed people was 6.6 million. Even though the March unemployment rates are still low, it articulates the available workers who are currently jobless is limited. Approximately 104,000 jobs were created in March 2018 according to The National Conference of State Legislatures.

Overall, the correlation between wages and labor will continue to be analyzed. In the future, employers may need to re-visit the development of benefit packages and bonus structures in order to entice employees to apply for available positions.

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