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The American economy gained 157,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at a sluggish 67,000 jobs. The headline unemployment rate declined to 3.9 percent for solid reasons: the size of the labor force stayed about the same, but the number of people without jobs declined by an impressive 284,000.
Wages of production and nonsupervisory workers were up at an annualized rate of 1.7 percent. Unfortunately, the latest CPI report shows inflation running at an annualized rate of 1.5 percent, which means workers saw only a minuscule pay raise. Looking at the entire past year, hourly wages increased 2.7 percent while inflation has increased at 2.8 percent. Over the past twelve months the average worker wages have been dead flat.
This is the new normal: decent but not great job growth, and no wage growth at all for blue-collar workers. An awful lot of people seem to think this is a sign of an economy that’s continuing to do great, but that’s not how it looks to me. It looks to me like a 21st century version of stagflation, where economic growth is OK but blue-collar workers are just dog-paddling along.
Over the past two years, blue-collar wages have increased 0.3 percent annually. That’s $150 per year—about the cost of a replacement pair of work boots. I guess you can decide for yourself if that’s the sign of a robustly growing economy.