Economy Watch: Wage Increases Slow in December

Although it looked like U.S. workers would enjoy better wages toward the end of 2016, a recent Bureau of Labor Statistics report shows lower growth than expected.
Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics

Are wage increases in the U.S. finally gathering steam? Wages have been a lingering concern since the recession, which put the kibosh on such wage growth as workers saw in the 2000s (not that much compared to the 1990s, however.). Toward the end of 2016, it finally looked like workers were going to enjoy a larger share of the increased worker productivity of the 2010s—but maybe not.

According to the Bureau of Labor Statistics’ employment report released on Feb. 3, average hourly earnings for all employees on private payrolls rose by 3 cents to $26 even in January, following a 6-cent increase in December, which was robust growth compared with most months during the year. For the entire year 2016, average hourly earnings rose by 2.5 percent, according the the bureau, which is a small amount over inflation.

Also on Friday, the Institute for Supply Management reported that its Non-Manufacturing Business Activity Index decreased to 60.3 percent, 0.6 percentage points lower than the December reading of 60.9 percent. That means the non-manufacturing sector of the economy is still growing—for the 90th consecutive month—but at a slightly slower rate in January.

The five industries reporting contraction in January, according to the institute, were: real estate, rental & leasing; educational services; transportation & warehousing; information; and arts, entertainment & recreation.