Hiring is solid in US, but pay remains tepid

Associated Press

WASHINGTON

On Labor Day weekend, the U.S. job market has found an old sweet spot: 5.1 percent unemployment – many miles from the 10 percent joblessness America endured back in 2009.

It’s the lowest rate in more than seven years, suggestive of healthy hiring levels that traditionally have fostered rising incomes, consumer spending and economic growth.

In August, the unemployment rate fell on the strength of a decent if less-than-stellar 173,000 added jobs. And most economists expect the government to eventually revise up that job gain because of seasonal trends that are notoriously difficult to calculate.

Friday’s employment data reflected the durability of the U.S. economy, which has so far withstood distress worldwide: tumultuous stock markets, a sharp slowdown in China, a perpetually struggling European economy and the start of a recession in Canada, America’s largest trading partner.

Yet the report also spotlighted aspects of an economic expansion that has been steady without being fully satisfying: Wage growth remains slight. And millions remain relegated to the sidelines of the job market.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, grades the job market as “good” but not great.

“It’s a solid B,” LaVorgna said. “Definitely not an A.”

The unemployment rate has dropped a full percentage point over the past 12 months, and for a good reason: More Americans are finding work.

At previous times during the recovery from the Great Recession, the unemployment rate had dipped only because many people had abandoned their job searches and were no longer counted as unemployed.

Employers have added nearly 2.6 million workers since last year – about 764,000 more than the number who left the workforce to retire, start school or end their job hunts in frustration, according to the government’s monthly survey of households.

A 5.1 percent unemployment rate fits the Federal Reserve’s picture of a normal economy.