Hiring was tepid in August, bringing average job creation in the private sector to 102,000 jobs a month since April. That is nowhere near the level of labor demand that’s needed to give employees the clout to bargain for raises. Accordingly, hourly wages weakened in August, up only one-tenth of a percent, all of which is most likely to be eaten up by inflation. (In 26 of the last 28 months, annual hourly wage growth has failed to outpace inflation.)
Sounds depressing — if you rely on your job to get by. But it was good news for investors. Their biggest hope these days is that the economy will slow just enough to curb inflation, but not enough to provoke recession. They took August’s jobs report, released yesterday by the Labor Department, as evidence that their wish was coming true.
The work force always suffers in a slowdown. But this one could hit employees especially hard because they will experience the lows — in terms of insecurity, stagnating wages and job loss — without ever having participated fully in the highs. As a share of the economy, wages and salaries have been driven to generational lows during the expansion that began in 2001. At the same time, the ability to borrow against one’s home is waning, and a slowing job market may make it harder to keep up with existing debts, a combination that could prove very difficult for many people.
A slowdown is preferable to the alternatives — a recession, or worse, stagflation, in which the economy is plagued by decreasing growth and rising inflation. But the time may come — soon — when investors, bankers and businesses will find little to cheer about in the good news.
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