As the unemployment rate has fallen in recent months and the economy has roared, one central question has bedeviled the American job market: Where is the wage growth?
New data on Friday suggested an answer: It is here, and it is now.
Average hourly earnings jumped 2.9 percent in January from a year earlier, the Labor Department said on Friday, the latest sign that the long, slow economic recovery is at last reaching Americans’ pocketbooks. Separate data released this week showed that private-sector wages and salaries rose 2.8 percent in the final three months of 2017 compared with a year earlier, the fastest growth since the recession.
“People have been wondering when the wages are going to start to rise,” said Catherine Barrera, chief economist of the online job marketplace ZipRecruiter. “I think that over the first six months of this year, we’re really going to start to see the wages rise.”
If such predictions are borne out, there could be political ramifications. President Trump hailed his economic record in his State of the Union address on Tuesday, and Republicans are counting on the strong economy to help them in the midterm elections in November. 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 voters may not focus on such nuances.
Economists cautioned against reading too much into a single month of data, which is preliminary and will be revised at least twice. Several times in recent years, wage growth has appeared to pick up, only to fall back to earth in subsequent months. And other measures of wage growth haven’t yet shown the same acceleration.