The week ahead is a jobs week. Amid dozens of quarterly corporate financial reports and central bank meetings across the globe, American investors will get their monthly dose of employment data.
And so what? According to the data, the U.S. is statistically near full employment. In May, John Williams, the president of the Federal Reserve Bank of San Francisco, said, “We’re basically at full employment or very near it.” So what would another month of unemployment around 5 percent tell investors?
On Friday, when July’s employment data is released, if the unemployment rate continues to be at or near 5 percent, it will mark a full year of what is commonly thought of as the level of full employment. But what should follow – pay hikes – hasn’t.
It’s been more than seven years since the average hourly wage for an American worker increased more than 3 percent a year. Pay increases that put a more meaningful amount of money into worker’s pockets have been tough to come by. Wages have been growing this year, but they have a ways to go to catch up to historic pay gains.
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During the boom years in the late 1990s and a decade ago – the past two stretches of full employment – average wages were growing by 4 percent. That’s a third more than what’s been seen by today’s fully employed workforce.
With so much global economic growth anxiety, long-term investors would be well-served seeing some growth in American paychecks.
Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami.