Wage Pressures Are Building Up In The US Job Market
Economists are increasingly convinced that wages for American workers are unambiguously on the rise.
Tuesday's NFIB survey of small businesses showed that an increasing proportion of small business owners are actually raising wages or planning on raising wages over the next few months. This indicator has been closely tied to actual wage increases in the past, giving more evidence that wages might be going up soon.
One of the only disappointing parts of last Friday's jobs report was the 0.2% drop in average hourly wages, potentially indicating an ongoing problem in the labor market. But, there's every possibility that the December wage drop will prove to be a fluke of the calendar. The source of the average hourly wage data is the Bureau of Labor Statistics' monthly household survey. Goldman Sachs economist Kris Dawsey pointed out in a research note that in months where the survey is taken in a week that ends on the 13th of that month, as happened in December, hourly wage data tends to be worse than normal. January, then, is likely to show better wage results.
UBS argues that factors like shifting demographics may be holding back aggregate wage stats, even though wages for individual demographics may be rising.
Bloomberg Chief Economist Michael McDonough tweeted out a chart that also supports rising wages and inflation in the near future. Both the NFIB compensation plans indicator and the Employment Cost Index have been rising recently, and the core Personal Consumption Expenditure price index, an important measure of inflation, could follow.