There is no denying it is a strong job market according to government data. Talk to hiring managers, company owners and entrepreneurs looking for help, and you hear an earful about how difficult it is to find qualified workers.
But that hasn’t turned into meaningfully higher paychecks.
Quick story: The Florida Keys has a small labor market in the best of times. A year after Hurricane Irma hit the area, the workforce shrunk by 11 percent as people moved away or evacuees never returned. When a major hospitality company in the region prepared to reopen after renovations brought on because of the storm, it didn’t hike pay to attract workers. Instead, it offered existing workers one-time bonuses if they referred a new worker to the company.
Jobs data for September are due to be released Friday in the week ahead. In the past week, after the Federal Reserve raised its target short-term interest rate for the third time this year, Chairman Jerome Powell said, “Our economy is strong. Growth is running at a healthy clip, unemployment is low, the number of people working is steadily rising, and wages are up.”
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That’s true. Average hourly earnings were up 2.9 percent in August compared to a year earlier. It was the strongest showing in nine years. But when adjusted for inflation, worker pay essentially is flat. Before the Great Recession, wages regularly were growing faster than inflation, providing workers with real pay raises.
Underemployment gets the blame in a study by two American and Scottish economists. As the study from economists David Bell and David Blanchflower states, “The unemployment rate is having no impact on wages after the Great Recession whereas it did before.”
One is considered underemployed if they can and want to work more, but isn’t, and isn’t working at a job utilizing their training. Underemployment is not unemployment, but it adds up to stagnant wages.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM; @HudsonsView.