Wage Increases Slim Amid Tighter Labor Market

For job hunters, today’s market might be as good as it gets. In March, employers advertised 6.55 million open jobs, the most on record dating to December 2000, the DOL said. At the same time, there were 6.59 million unemployed people.

That is a historical anomaly. Typically, there are far more unemployed people than advertised job openings—often twice as many. In July 2009, after the Great Recession, there were 6.7 unemployed people, on average, for each open job. With that ratio now at essentially one to one, the job market would be expected to tilt in favor of workers and job-seekers.

But the sharp jump in openings has not led to a comparable jump in pay. One measure of average hourly pay suggests wages increased by 2.6 percent in April from a year earlier, even as the unemployment rate reached a 17-year low of 3.9 percent. The last time the jobless rate fell below 4 percent, average wages rose at an annual rate of 4.5 percent.

An analyst at the Washington Center for Equitable Growth says he thinks the record-high number of job openings in part stems from the slim wage gains.

Typically, as unemployment falls, employers advertise fewer job openings because it tends to cost them more to recruit and pay new employees. But now, with wage gains sluggish, employers may be willing to post jobs because they don’t need to pay so much.

Source: St. Louis Post-Dispatch