The U.S. has added at least 200,000 jobs a month for 10 straight months to mark the longest streak since 1995. But with Wall Street now viewing 200,000-plus gains as the new normal, investors have shifted their focus to something else: how much workers earn.
The amount of money employees earn each hour has risen much slower than usual since the nation exited recession in mid-2009. Unless wage growth picks up, economists say, the U.S. is unlikely to shift into a higher gear despite the upsurge in new jobs.
The annual increase in hourly pay has been stuck in a narrow range of 1.8% to 2.1% for the past four years, just two-thirds as fast as normal. Yet economists look for wage growth to push up to the 2.5% or even 3% range in 2015, putting it more in line with historical trends.
Hourly earnings shot up 0.4% in November to nudge the 12-month pace of wage gains to 2.1%, just a notch below its post-recession high. Analysts expect a 0.2% increase in hourly pay in December.
Anything less would be disappointing. Most economists believe the surge in hiring and falling unemployment rate should force companies to bid up wages in the competition for new workers.
The past year saw a shift toward higher-paying jobs from lower-paying ones. Retailers, restaurants and shippers such as UPS and FedEx almost always add lots of jobs in the last month of the year. But it would be a good sign if hiring in well-paid segments such as manufacturing, construction and the professional ranks all continued to rise.
The official unemployment rate has tumbled to 5.8% from 8.6% three years ago and economists see it falling another tick to 5.7% in December. At this stage of the recovery, though, the so-called U6 unemployment rate bears even closer watching.