3 things to know about the January 2018 jobs report
2018 if off to a solid start, with the unemployment rate holding steady at 4.1 percent.
3 Things You Should Know From the January 2018 Jobs Report
It looks like we’re off to a solid start. The U.S. economy added a better-than-expected 200,000 jobs in January — which marks the 88th straight month of job growth, the longest streak on record. The unemployment rate held steady at 4.1 percent, its lowest level since December 2000, for the fourth straight month.
Here are some highlights from the report.
1. Wage growth is FINALLY picking up. After a year stuck at 2.5 percent growth, wages are finally beginning to increase at a faster-than-expected pace.
According to the Wall Street Journal: “Average hourly earnings rose 2.9% in January from a year earlier, the strongest gain since 2009 and above the 2.6% gain economists had forecast…The data signals that a tight U.S. labor market is finally beginning to filter through into higher pay for workers. Many investors believe wage growth will propel broader measures of inflation growth by allowing companies to raise prices.”
According to the New York Times: “‘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.”
According to NBC Connecticut: “Average hourly pay rose 9 cents in January to $26.74, after an even bigger increase in December. Compared with 12 months earlier, wages rose 2.9 percent, the biggest gain since the recession ended eight years ago. Weak wage growth has been one of the economy's most persistent shortcomings for nearly a decade. But with fewer workers to hire, employers are being forced to raise pay. Some of January's increase reflects one-time increases, such as the minimum wage hikes in some states.”
2. The competition for workers is getting fierce. With unemployment remaining low, employers are being forced to work harder to find and attract candidates.
In some cases, that means altering expectations and potentially unattainable standards.
According to the New York Times: “[Employers] 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.”
According to Market Watch: “But make no mistake: Unemployment is extremely low and likely headed below 4% later this year for the first time since 2000. There’s plenty of jobs available and companies want to hire, even if applicants are not of the same quality when the unemployment rate was higher.”
According to the Wall Street Journal: “‘With little to no slack left in the economy, the major challenge for both policymakers and firm managers is where will businesses find the workers to meet growing demand in a new economy increasingly organized around science, mathematics and technology in a tightening labor market.’ Given that there is roughly one worker per job opening in the economy, the narrative inside the labor market is rapidly shifting from that of triumph to that of concern amongst firms of all sizes over how to fill positions among labor scarcity…firms are about to enter a period of rapid integration of technology as a substitute for labor to avoid growing bottlenecks in production and the provision of services."
3. The Fed will likely approve an interest rate hike in March. Steady unemployment rates — combined with the recent increase in wages — have combined to give the Fed the confidence to raise interest rates in the coming months.
According to CNBC: “Traders widely expect the Federal Reserve in March to approve a quarter-point hike in its benchmark interest rate, which is tied to most consumer rates like credit cards and adjustable-rate loans. The market expects another in June and a third by the end of the year, according to the CME's calculations of action in the fed funds futures market.”
Low unemployment means the job market is in your favor. Use these negotiation strategies to make sure you’re not leaving any money on the table when you land your next job!