U.S. Added 200,000 Jobs in January; Unemployment at 4.1%


The question — the “bazillion-dollar question,” Ms. Frankiewicz said — is when strong hiring will translate into strong wage gains for workers.

All Eyes on Wages

Lagging pay has been a persistent economic mystery. But many economists expect wage growth to accelerate in 2018, especially if the unemployment rate continues to fall, forcing companies to compete to attract scarce workers.

“I think this is the year that we will start to see some wage pressure,” said Dan North, chief economist at Euler Hermes North America. Mr. North noted that more people were quitting their jobs, a sign of confidence in the economy, and that more companies were reporting having trouble finding workers, which should eventually lead them to raise pay.

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Why Pay Is Lagging as Job Growth Has Continued

Increases in wages have barely outpaced inflation, one of the mysteries of an economic recovery now in its ninth year.



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There are signs that employers may be loosening their purse strings. A separate report from the Bureau of Labor Statistics this week found that private-sector wages and salaries rose 2.8 percent in the last three months of 2017, compared with a year earlier, the fastest growth since the recession. But other measures have found that pay growth is slowing.

One factor that could have enhanced January’s pay gains: minimum-wage increases that took effect in many parts of the country on Jan. 1.

Hunting for Workers

With unemployment low, employers are working harder to find employees. They are becoming more willing to consider candidates with criminal records, for example, or to waive educational requirements. The car retailer AutoNation said this week that it was no longer refusing to hire workers who test positive for marijuana use — a sign of changing legal and societal norms, but also an indication that companies are rethinking hiring practices in a tight labor market.

“People who are marginally employable suddenly become highly employable in a period like this,” said Joseph Brusuelas, chief economist of RSM, a financial consulting firm.

The strong labor market is pulling workers off the economy’s sidelines. The labor-force participation rate — the share of adults either working or actively looking for work — has edged up recently. Diane Swonk, chief economist for the investment firm Grant Thornton, said she expected to see companies start trying to draw people into the labor force by letting them work from home or offering flexible schedules.

Mooyah Burgers, Fries and Shakes, a 100-restaurant chain based in Texas, recently started a program to help franchisees expand their marketing efforts by hiring at-home parents and others who had not been in the labor force. The jobs are meant to appeal to people who might not be looking for traditional work: They do not require being at an office every day or having a traditional schedule.

Michael Mabry, Mooyah’s president and chief operating officer, said that kind of flexibility made sense when filling full-time slots with experienced workers was harder than ever.

“Why do I have to be pigeonholed into a particular résumé or a particular experience?” Mr. Mabry said of his recruitment approach. “I’m sure there is someone out there who can bring something different to the team. It’s just having an open mind.”

Political Fallout

In his State of the Union address Tuesday night, President Trump boasted of the strength of the American economy, citing a rebound in the manufacturing sector and a decline in the unemployment rate for African-Americans, which recently hit its lowest level on record.

Most economists contend that Mr. Trump deserves relatively little credit for the strong economy, which predates his election and is partly a result of a global rebound outside his control. But it is true that recent job growth has been concentrated in blue-collar sectors that Mr. Trump has often emphasized. And it is likewise true that the improving labor market is increasingly reaching groups, including African-Americans, that are often at a disadvantage.

Mr. Trump and other Republicans argue that the economy will also benefit from the recently passed tax law. They point to recent announcements from Walmart and other companies, which have cited tax savings in their decisions to raise wages and pay out bonuses to workers. Many economists are skeptical of such claims, regarding them as timely public relations moves. But they say the tax cuts should provide at least a modest addition to economic growth in coming years — although probably not enough to let the law pay for itself, as its backers have promised.

“I hear my clients saying the tax bill gave them more confidence in the pro-business economy,” said Tom Gimbel, chief executive of LaSalle Network, a staffing firm. “There’s confidence coming from D.C. that they’re not going to get in the way.”

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