Americans are going back to work,
though mostly in lower paying jobs at the moment. That’s why those states and cities raising
their minimum wage rate are so important for growth.
The U.S. added 242,000 new jobs in
February, and added 30,000 more jobs to payrolls over the past 2 months, in revisions. Why does this confute the naysayers that
predicted an oncoming recession?
Consumers are buying again, with retail jobs up 54,900, and governments
hiring again with all the public works projects starting or about to start. Hence the 19,000 new construction jobs.
The increase in jobs last month is
a sign the economy is picking up steam despite a rocky start to the year for stocks,
mostly because of worries that a global slowdown could undermine growth at
home. The jobless rate, meanwhile, was unchanged at 4.9 percent.
This is when the EU jobless rate is
stuck at 10.3 percent, with Italy’s jobless rate at 11.5 and Spain’s at 20.9
percent respectively.
Even more remarkable was that the
labor participation rate continues upward with 500,000 more workers entering
the workforce in February and 2 million since.
It really looks like Americans are going back to work; particularly those
most discouraged, as more states raise their minimum wage.
Oregon is the latest state jumping
on the bandwagon, with its minimum wage rising in increments to $15 per hour
over 5 years. Another sign of strength
was that temporary help services fell for a second straight month, down 10,000
following a 22,000 decline in January. Government added 12,000 to payrolls
while construction, where spending is solid, rose 19,000, as we said. And this
is even though mining and manufacturing jobs contracted, down 19,000 and 16,000
respectively.
The U.S. has created 12.7 million
new jobs since 2011 and the unemployment rate has fallen below 5 percent. But
workers still aren’t getting big pay raises. Though almost seven years into the recovery,
wages have barely accelerated. Hourly pay fell in February, reducing the
year-over-year increase in wages to 2.2 percent from a post-recession high of
2.6 percent two months ago.
And, the so-called U6 rate that includes
people who can only find part-time work or have become too discouraged to look
for work dipped to 9.7 percent from 9.9 percent and reached the lowest level
since May 2008.
We maintain raising the minimum
wage of lowest paid workers is important for several reasons. Firstly, health-care companies and
social-assistance providers led the way in hiring, adding 57,000 jobs.
Retailers beefed up staff by 55,000, and restaurants took on 40,000 new workers. This means more employed consumers to boost
retail sales, which comprise half of consumer spending, and consumers now power
some 70 percent of economic activity.
Raising the minimum wage also takes
more lower paid workers off the assistance rolls (such as food stamps), and
unemployment insurance, and even welfare, which improves our budget deficit, as
well.
It’s becoming a virtuous cycle, in
other words, in spite of the drop in energy prices. It means more money in the pockets of
consumers, which in turn creates more jobs, and economic growth.
Harlan Green © 2016
Follow Harlan
Green on Twitter: https://twitter.com/HarlanGreen
No comments:
Post a Comment