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Good news released by the US Department of Labor today. 288,000 new jobs were created in April, and the figures for February and March were revised upwards. The US economy is projected to grow at a pace of 4.6% for the year, which is the strongest growth since 1984.
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Also, the outlook on employee wages is grim as inflation increases
WASHINGTON - Despite encouraging employment news last week - the economy created 300,000 jobs in April - the outlook for wages is gloomy.
Amid clear signs that inflation is heating up, most economists say the combination of cost-squeezed employers and "cowed" workers will keep raises small in the months leading to November's elections.
The Department of Labor reports that in the first quarter, salaries rose just 0.6 percent and gained only 0.3 percent in April. Meanwhile, the latest report about national output from the Department of Commerce showed inflation running at an annual rate of 3.2 percent.
Despite the overall recovery, "wages have been just barely keeping up with inflation and now are getting somewhat below inflation," said Lawrence Mishel, president of Economic Policy Institute, a liberal-leaning research group.
"That is the slowest wage growth we have had in decades."
"It'll be a bit longer until we get to a wage recovery because there is still so much slack in the economy," said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI research group.
"There are a lot of cost pressures affecting firms," such as soaring prices for insurance, energy and raw materials, he said. "Firms are doing their best to battle those factors, so they aren't likely to give very much on labor."
Economists cite a number of factors for the wage recession. Perhaps the single biggest is the loss of 2 million jobs in the past three years. With so many unemployed Americans still eager to take jobs, people who do have paychecks are willing to accept small raises.
"This deep labor slump affects those who are employed, not just those who are unemployed or afraid they will lose their jobs," Mishel said. Because employees realize how readily they can be replaced, "they are less able to push for higher wages."
For example, union members at a California Boeing plant last week approved a three-year contract, ignoring their leadership's recommendation to reject it.
The workers accepted a 3 percent raise and agreed to pay 10 percent more toward medical premiums.
Mishel said the threat of seeing work go overseas or to lower-paid immigrants has made members less demanding. "They are cowed," he said.
Meckstroth said companies have little choice but to hold down wages because global competition is so intense.
"The higher materials-cost pressures are coming at a time when Wall Street expects increased profitability," he said. "You've got to offset those higher costs somewhere, and labor is your most variable cost."
Management consulting firm Booz Allen Hamilton released a survey last week from 156 CEOs that indicated 85 percent consider cost reduction their highest priority.
This fierce drive to cut costs has led to sharp hikes in productivity, rising at a robust rate of 4.6 percent a year since a short-lived recession began in March 2001.
Economic theory has long held that rising productivity will lead to higher wages because employers can afford to pay more when workers boost output. So far, the increased productivity has generated higher profits, not bigger raises.
In defense of employers, Meckstroth notes companies aren't being truly tight-fisted. The problem is that so much of what they are spending on labor is going to health insurance, he said.
Despite encouraging employment news last week - the economy created 300,000 jobs in April - the outlook for wages is gloomy.
Amid clear signs that inflation is heating up, most economists say the combination of cost-squeezed employers and "cowed" workers will keep raises small in the months leading to November's elections.
The Department of Labor reports that in the first quarter, salaries rose just 0.6 percent and gained only 0.3 percent in April. Meanwhile, the latest report about national output from the Department of Commerce showed inflation running at an annual rate of 3.2 percent.
I currently have about ten high paying tech jobs that can't be filled by qualified people because the qualified don't exist.
Maybe your 2 million should strive a little harder than line cook at McDonalds.
Education and a little effort can go a long way. After all, you won't settle for a minimum wage job anyway, will you.
I agree that education and training are the way to go, but you can't suggest that laziness was the reason for all of the job losses in the past few years.
And, by the way, my original comment wasn't an attack on Bush - I was just pointing out that despite the good news of the past few months, there are still many more people who need jobs.
Just out of curiousity, what kind of people are you looking for for those tech jobs you mentioned? Why don't the qualified people exist?
I agree that education and training are the way to go, but you can't suggest that laziness was the reason for all of the job losses in the past few years.
And, by the way, my original comment wasn't an attack on Bush - I was just pointing out that despite the good news of the past few months, there are still many more people who need jobs.
Just out of curiousity, what kind of people are you looking for for those tech jobs you mentioned? Why don't the qualified people exist?
I assumed this was going in the we lost 2 million high paying jobs and are now replacing them with Circle K and McDonalds jobs direction. My bad.
We experience two problem areas in finding people.
First are the entry level positions we bring in. For some unbelievable reason they refuse to learn and advance. We offer on the job training, send them in the field to learn and even hold classes to teach them. And 99% are just happy to pull cable and stay there. Unfortunately for them those are the least stable positions. It's too bad because as we reduce cabling crews we are usually in a major bind for trained up techs but can't move them into those departments. Total lack of effort. They are smart people too, that's why we hired them in the first place. I don't understand that at all.
Second are the certified techs. A+, Cisco etc. We have a great core group but lately have had a hard time getting new techs to stay. They know the market is theirs for the taking and take advantage of it big time. These guys are like resume machines. They will work until offered more somewhere else and jump ship in a heartbeat. Some don't even give the chance to match. I can't say I totally blame them but there is a shortage of these employees and they know it.
That's unbelievable to me also that people don't take advantage of all those opportunities. I really wish my company would offer things like that, but it doesn't and, honestly, it's starting to push me out the door.
And the lack of loyalty sucks, too, but being a poster on an Arizona Cardinals football board, I'm sure you're familiar with that topic.
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