WASHINGTON — As the U.S. economy has recovered steadily from the Great Recession, the critical missing piece has been a painful lack of pay raises for many Americans.
Their pain may be easing.
Friday’s jobs report signaled that raises finally have begun to flow through an economy in which, once you factor in inflation, most people earn less than when the Great Recession struck in 2007.
The average hourly wage jumped 0.5 percent between December and January — the sharpest monthly gain since 2008 — the government’s survey of businesses found. The average now has risen 2.2 percent in the past 12 months to $24.75, comfortably above inflation, which rose just 0.7 percent in 2014.
So if you’ve gone without a meaningful raise, should you expect one?
Skeptics still have doubts. But the quickening rate of hiring provides reason to hope.
The surprisingly robust report the Labor Department issued Friday also showed that hiring was far stronger in November and December than previously thought. Employers added 423,000 jobs in November — the most in 17 years. Job growth in December was revised sharply higher to 329,000 from 252,000, and employers added 257,000 jobs in January.
Employers have added 3.2 million jobs in the past 12 months
The unemployment rate last month rose to 5.7 percent from 5.6 percent. But that occurred for a good reason: More Americans began looking for jobs, although not all of them found work. Their job hunting suggests that they are more confident about their prospects.
“For the average American, it’s certainly good news — 2015 is going to be the year of the American consumer,” said Russell Price, senior economist at financial services firm Ameriprise. “With job growth being strong, we’re going to see a pickup in wages and salaries.”
The increased hiring in January occurred across nearly all industries. Construction firms added 39,000 jobs and manufacturers 22,000. Retail jobs jumped by nearly 46,000. Hotels and restaurants added 37,100, health care 38,000.
But the government’s figures don’t pinpoint which occupations have benefited most from rising pay. Wages have risen at a slightly slower pace for non-managers, indicating that bosses are pocketing much of the gains. Still, corporate announcements and job postings indicate that wage growth has been extending to a broad range of industries and professions.
“America is really getting back to work, and that’s the first step to getting better paychecks,” said Tara Sinclair, chief economist at and a professor at George Washington University.
The pace of hiring has accelerated 34 percent since 2013. That growth has reduced the number of job seekers and made it harder for employers to find talented employees. The trend, in theory, has finally forced companies to loosen their grip on pay to attract and keep the best workers.
Employers have added 3.2 million jobs in the past 12 months — including 257,000 in January, 329,000 in December and a sizzling 423,000 in November.
Some economists note that pay figures tend to be volatile from month to month and that January’s blowout average increase might be unsustainable. Still, each additional job increases the number of paychecks in the United States, which drives greater consumer spending. That tends to fuel further hiring and higher wages.
Some smaller firms are enjoying a level of growth that has begun to deliver year-end bonuses and raises.
Christopher Falcone is among the beneficiaries. Falcone, 32, has been working as an accountant at a Chicago real estate investment company for the past six months. He said he just received a 3.5 percent salary increase and a 4 percent cash bonus — enough to plan a visit to Disney World to celebrate with his family.
Other workers are negotiating higher salaries after reviewing the pay levels advertised on job sites.
David Castaneda felt that the 3 percent raise he recently received didn’t fully value his performance as a financial analyst at a cemetery and mortuary outside Los Angeles. So Castaneda, 27, researched other job opportunities and presented the findings to his boss. The result? A 31 percent pay increase to $85,000.
“The opportunities are out there, and wages are being pushed up,” Castaneda said. “If everyone were to do this, they would get it. But most people are afraid that their boss would say no.”
Still, the year-over-year average wage increase of 2.2 percent can feel a lot better than it might sound given today’s historically low inflation. Thanks to sinking prices at the gasoline pump, consumer prices have edged up just 0.8 percent in the past 12 months. That means wages have risen a solid 1.4 percent after inflation.
“That’s a step in the right direction,” said Bill Hampel, chief economist at the Credit Union National Association.
