Economy Adds Almost 300K Jobs, Amid Another Strong Report
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The latest jobs report is in, and it is a good one. U.S. businesses continued to add jobs to their payrolls at a rapid pace in February. According to the government's monthly employment report, the economy added close to 300,000 jobs. The unemployment rate ticked down as well. But as NPR's John Ydstie reports, workers still aren't seeing much improvement in their wages.
JOHN YDSTIE, BYLINE: To be precise, the economy added 295,000 jobs last month. Meanwhile, the unemployment rate declined two-tenths of a percent. Both numbers exceeded economists' expectations, among them, Megan Greene, chief economist at John Hancock Financial Services.
MEGAN GREENE: So the headline number of jobs we've added was fantastic - 295,000. Unemployment dropped to 5.5 percent. I think that beat most expectations.
YDSTIE: February continued a string of months with strong job creation, but it was disappointing in one important area - wage growth. Wage has increased a disappointing one-tenth of 1 percent last month, returning to a pattern that Greene thinks is likely to continue.
GREENE: We're adding a ton of jobs every month, and that's really good news. But we're adding them in all the wrong sectors if what you want to see is upward pressure on wages.
YDSTIE: And last month, there was disappointing job growth in some high-wage sectors like construction and manufacturing. Greene believes the U.S. will see weak wage growth for some time because of a global glut of labor, partly due to sluggish economies in Europe and China. She also says the kind of jobs being created in the U.S. are mostly lower-paying service-sector jobs.
GREENE: We're adding most of our jobs at or slightly above minimum wage, and as long as that's the case, you're not going to get a whole lot of upward pressure on wages. And if you don't have a lot of upward pressure on wages, there won't be a lot of upward pressure on inflation either, and that will certainly drive the Fed's policy going forward.
YDSTIE: The Fed has signaled it will likely begin raising interest rates this year, maybe as soon as June. Greene says she thinks that's premature given the lack of wage pressure and low inflation. She also believes overall economic growth will be held below historical rates for a recovery because of the mix of jobs being created. Greene says many low-wage jobs are going to workers who've been receiving benefits like food stamps or SNAP, and their wages are barely replacing those benefits.
GREENE: Their benefits are actually being reduced, and so net-net, they're kind of in the same position. They're not using their newfound wages to go out and spend and boost the economy, they're just trying to make ends meet.
YDSTIE: Until job growth increases for higher-paying positions, says Greene, wage growth will continue to lag. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.