The outlook for the economy became sunnier on Friday after the Labor Department reported that employers added 295,000 workers in February, far exceeding expectations, and also recorded a drop in the unemployment rate. The data, though, offered disappointing results for wage growth, which for months has barely budged.þþThe unemployment rate fell to 5.5 percent, its lowest since mid-2008, down from 5.7 percent in January. Last month, wages rose just 0.1 percent, according to the Labor Department, a disappointment coming off an increase of 0.5 percent in January.þþAnalysts had called for muted results largely because of unusually snowy weather. Instead, the report prompted a new round of optimism about the economy’s recovery and speculation on Wall Street that the Federal Reserve might be inclined to move to raise interest rates midyear rather than wait until fall.þþ“We were all on guard for signs of a February freeze-up, but this is a barn burner of a jobs report,” said Mark Hamrick, an analyst at the personal finance site Bankrate.com. “The Fed will say the pieces are coming together.”þþJob growth came particularly from the service sector, with leisure and hospitality adding 66,000 jobs, as well as an expansion of 54,000 jobs in education and health.þþStill, one consistently dark patch in the recovery has been the sluggish growth of wages. Average hourly wages for private-sector workers have been rising slowly, at around 2 percent, for the last few years.þþSlow wage growth has helped prevent the economy from returning to its potential, making many Americans feel as if the recovery has left them behind.þþAlso in February, the labor force participation rate fell slightly, dropping to 62.8 percent, from 62.9 percent.þþ“Everyone knows of someone who has been laid off or has a friend or relative who has been laid off,” said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. “We hear we’re on the road to recovery, but people aren’t convinced of that.”þþStill, many economists have a rosier outlook, expecting wages to finally start to increase at a faster pace this year as the job market tightens.þþ“We’re facing a turning point, and we’re going to see more pressure on wages,” said Tara Sinclair, chief economist at the job search site Indeed.com.þþMark Zandi, chief economist at Moody’s Analytics, said current wage growth data appeared gloomier than the underlying reality, in part because of demographic factors. As well-paid baby boomers enter retirement, to be replaced by younger workers starting out at lower salaries, he said, the overall wage pattern has tilted slightly lower. Also, people who have been out of work for long stretches are starting to come back into the labor force and accepting lower wages.þþ“That’s biasing down the measure of wage growth,” Mr. Zandi said.þþBut there is growing evidence, he said, that an improvement is underway. One indication is the growing number of younger workers changing jobs as they gain more confidence in their prospects. On average, workers who switch jobs get a 14 percent pay increase in their new salaries.þþParadoxically, Mr. Zandi cited the labor dispute at West Coast ports and strikes at refineries as good news for the economy.þþ“You don’t see those kinds of actions in a labor market that’s weakening,” Mr. Zandi said.þþAnother positive sign for wages is coming from the retail sector. Last month, Walmart said it planned to raise its minimum hourly pay to $9 and lift it to $10 next year. TJX Companies, which owns Marshalls and T.J. Maxx, announced similar raises.þþBut labor advocates like the National Employment Law Project say retailers should also be focusing on adding hours as well as lifting pay for some workers. The group said that retail workers make up 11 percent of working adults but that 18 percent of those who are working part time would rather be employed full time. Many who want more hours are women from minority groups.þþ“In addition to paying a fair wage, retailers like Walmart need to provide their work force with stable hours and predictable schedules that allow people to pay their bills, plan their lives and care for loved ones,” Christine Owens, executive director of the National Employment Law Project, said in a release this week.þþShannon Henderson, 29, works part time in customer service at a Walmart store in Sacramento, and she supports two children with her $10-an-hour wages. Her hours are unpredictable, often interfering with her breast-feeding schedule for her 9-month-old. She wants to work more but said the company did not have more full-time positions.þþIf Ms. Henderson worked full time, she said, she might be able to afford a car. For now, she said, “I don’t make enough money.”
Source: NY Times
