Wage Dip May Prove Temporary as U.S. Job Outlook BrightensMichelle Jamrisko
December’s disappointing drop in U.S. worker pay may prove to be a temporary bump in the road on the way to bigger increases as the jobless rate falls.
The unexpected 0.2 percent drop in hourly earnings on average last month, the biggest since records began in 2006, was probably influenced by the mix of workers on payrolls, economists said. Big gains in hiring of seasonal holiday workers, more entry-level positions and retirements of more expensive employees all probably played a role.
“You’ve hired a lot of people in the last three or four months, and to the extent that you’re bringing in a lot of new talent, this new talent is not getting paid as the more experienced talent,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “It’s probably only temporary. I would suspect that at the beginning of this year, as we go forward, those wages will pick up.”
Last month’s decrease in pay followed a 0.2 percent gain in November that was smaller than previously estimated, the Labor Department reported today. That caused the gain over the past 12 months to slow to 1.7 percent, the smallest since October 2012, from 1.9 percent.
Retail workers saw average earnings decline 0.4 percent to $17.04 an hour from $17.11 in November.
Stores and online merchants hired a larger-than-usual army of seasonal workers to help keep up with the demand for holiday gift-giving. Amazon.com Inc. prepared for the crush this year by adding 80,000 seasonal workers, up from 70,000 last year.
“The seasonal hires in December I think did make a difference -- they’re often part-time people,” said Silvia.
Employers added 252,000 jobs in December following a 353,000 rise the prior month that was more than previously estimated, the report also showed. The jobless rate dropped to 5.6 percent, its lowest level since June 2008.
The pause in wage increases probably allows Fed officials to remain “patient” in judging when to raise interest rates for the first time since 2006, even amid a brighter outlook for the world’s largest economy.
“Most participants saw no clear evidence of a broad-based acceleration in wages,” according to the minutes of the policy makers’ Dec. 16-17 meeting in Washington released Jan. 7.
Atlanta Fed President Dennis Lockhart is among those saying the diminished wage gains will prove fleeting.
“I am prepared to look at the earnings numbers as potentially noise or month-to-month fluctuations that are not really telling of any condition in the economy that we have to worry about,” Lockhart said in an interview with Bloomberg News today.