It’s the Wages
By Isaac Cohen*
The latest figures on US employment, released last week by the Labor Department, revealed the continuation in October of the vigorous trend in job creation which has prevailed throughout the year. With 214,000 new non agricultural jobs created last month, the unemployment rate decreased to 5.8 percent and average monthly job creation for this year remained close to 230,000.
However, in October wages increased just 0.1 percent from the previous month. This is consistent with the stagnation of wages of the last five years, at an average yearly rate of 2 percent, barely above the rate of inflation. By sectors, in October, most of the hiring was in low wage retail and hospitality, which contributed over one third of the new jobs created last month.
Wage stagnation may help understand why, last week, most of the voters did not believe the economy is improving. Exit polls carried out last week on the day of the last election revealed that 78 percent of those interrogated were very or somewhat worried about the economy’s future, while two thirds said the economy was worsening.
Additionally, despite electing Republican candidates in five states, Alaska, Arkansas, Nebraska, Illinois and South Dakota, voters also approved initiatives to increase the minimum wage.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.