Recovery Finally Yields Big Gains for Average Worker’s Pay


While wage growth was robust last year, government data for December showed a more tepid increase in employment, with 156,000 jobs added during the month, and a slight uptick in the unemployment rate to 4.7 percent.

Until recently, a rise in salaries one month would peter out the next, but the upward trajectory in 2016 reflects wage gains even for Americans at the low end of the pay scale, Ms. Swonk said. Leisure and hospitality workers, for example, saw hourly earnings jump 4.4 percent from a year earlier, equal to the increase enjoyed by employees in the surging technology sector.

To be sure, a number of the economic problems cited by Mr. Trump during the campaign remain: millions of former workers not even looking for jobs, ebbing factory positions and fewer opportunities for the 55 percent of Americans without college degrees or other post-high school credentials.

“Strong economic growth doesn’t really matter if it’s not widely distributed,” Ms. Swonk said. “You can have a better economy but still not good enough for people who aren’t participating at all.”

A more comprehensive government barometer of unemployment, which includes workers forced to take part-time jobs because full-time positions were not available, stood at 9.2 percent in December, a much higher level than at this point in past recoveries.


A job fair in Brighton, Colo., on Dec. 14. For all his criticism of President Obama’s economic stewardship during the campaign, Donald J. Trump inherits an economy that is fundamentally solid.

Matthew Staver/Bloomberg

But rising wages should counter the economic undertow, especially if the gains remain broad-based. And while a 2.9 percent increase may not sound like much, it goes much further because inflation is about 1.7 percent.

Economists expect wages to rise by up to 3.5 percent in 2017 — still below the gains many workers saw in the recovery of the mid-2000s, and in the tech-fueled boom of the late 1990s.

Although not reflected in the December figures, many low-wage workers are getting raises this year because of state increases in the local minimum wage. Some of the increases were substantial, with Arizona, Maine and Washington each raising the floor by $1.50 or more an hour.

Even in California, where, at 50 cents an hour, the wage gain is not as steep, one in 10 workers has gotten a raise. And minimum-wage gains can have a spillover effect, pushing up pay for workers just above the bottom salary tier.

For all his criticism during the campaign of Mr. Obama’s economic stewardship, Mr. Trump will inherit an economy that is fundamentally solid. Consumer sentiment, corporate profits and the stock market are all at or near multiyear highs.

On Friday, Wall Street embraced the not-too-hot, not-too-cold labor market figures, lifting the Dow Jones industrial average close to 20,000 and a new nominal record.

Investors and traders are watching the jobs data closely for clues about when the Federal Reserve Board may next raise interest rates.

Last month, the Fed increased interest rates for only the second time in a decade, and policy makers signaled that three more increases could come this year. The wage gains are among the reasons the Fed is likely to stick to that plan, Ms. Swonk, the Chicago economist, said.

Monthly job creation last year was well below the 236,000 average for hiring in 2014 and 2015. But with the economy close to what Fed policy makers and other experts consider full employment, employers are increasing wages, to retain workers and to attract new ones.

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