Josh Boak and Christopher S. Rugaber
WASHINGTON (AP) - No explained in Econ 101.
Every month is US employment rises and unemployment falls. Finally, sales and inflation thresholds expects to start the reaction.
It happens.
Last month, employers added 252,000 jobs healthy - ending the best year of adjustment since 1999 - and the unemployment rate fell to 5.6 percent from 5.8 percent. However, inflation can not even reach the target rate of 2 percent of the US Federal Reserve. And the wages barely moves. In December, the average hourly wages actually fell.
Economists have struggled to explain the phenomenon.
"I may be a plausible theoretical or empirical explanation of why the hourly wages would be reduced to nine months can not find jobs, we have added at a rapid pace," said Patrick O'Keefe, chief economist at consultancy firm CohnReznick.
Normally, this low unemployment rate is the central bank raised its benchmark rate on doping to prevent inflation and overheating of the economy. Not this time. Although historically low rates the Fed helped support the economy since the financial crisis of 2008, these low prices have not complied with the other target, wages and inflation to normal levels.
While inflation remains below their target, the Fed can print an interest rate increase over the middle of the year delay the feeling that most economists forecasting a rise. Thanks in part to the decline in oil prices, many economists this year are also considering less than inflation in 2014th
If the US economy experienced a similar setting last tour in 1999, the average wages by 3.6 percent from 1.6 percent last year, said the government.
He explains the continued strong employment growth without inflation? Here are four key factors:
PERSISTENT damage RECESSION
Although the unemployment rate is close to a healthy level, many other labor market policies remain below.
There are still 6.8 million people working part-time who can not find full-time employment, compared to 4.1 million before the recession. Each of these potentially competing unemployed to work full-time, thus maintaining the lowest wages.
And there are 2.3 million people who have been looking for work, some of them because they grew discouraged about their prospects. Others have decided to return to school or in the custody of the parents. It is against 1.3 million before the recession.
And a broader gauge of unemployment, which officially unemployed and involuntary part-time and those who have stopped that includes, is 11.1 percent. This number has improved since the recession, but not as much as the official unemployment rate.
Jennifer Durham, vice president of Checkers chain of fast food restaurants 800 so that it plans to add 50-60 restaurants this year. Everyone should employ 25 to 30 people.
Checkers great pressure, but not face to increase to wages for the workers. "There is no shortage of candidates," Durham said.
The end of unemployment benefits has expired in the long run, to provide up to 99 weeks of aid until a year ago, can also help to reduce wages, said Daniel Alpert, managing director of Westwood Capital, said.
This is because some unemployed had to take probably lower paying jobs. Not have jobs in retail or food at or near the minimum lot more purchasing power than the unemployment benefit, Alpert said. This means that new jobs will not increase inflation much more if the workers can not afford much more than they did when they were unemployed spend.
Blame ROBOT
What in the automotive industry shows a lot about the way the economy has changed - and why the unemployment rate to 5.6 percent, almost normal is not igniting wages.
New car sales last year reached 16.5 million, the best result since 2006. But the gains are not recover all Automotive jobs lost to the recession - let alone to expand employment in the industry over the past eight years. The number of persons employed in the automobile has about 160,000 shy pre-recession levels more than 1,000,000.
The reason is that companies are afraid to go back in time, when she had the capacity of the plant as well. They are so squeezed more power with less capacity. Coming out of the recession, car reconfigured factories and robots added to produce vehicles with low plants and fewer workers.
In addition, the United Auto Workers union agreed to help pay cuts in an effort to General Motors, Ford and Chrysler. New hires began, around $ 16 per hour, about half of what workers earn long term.
About a quarter of the factory workers in Detroit are now the starting salary. Even longtime UAW workers had no hourly wage increase since 2007, there was an annual monitoring of sharing profits corresponding to about $ 4 per hour.
Similar trends have been developed in other plants and other industries. O'Keefe is, for example, that retailers sell more goods than before the recession, but still employ fewer workers.
Although recruitment in the most profitable industries in many cases are lagged wages. The average salary for truck manufacturers rose by only 0.7 percent last year, less than half the average for the economy. Pay the transport and storage of employees increased by 0.9 percent.
CHECK DEMOGRAPHICS
Seen Uber ride, Snapchatting millennium?
Since the beginning of the season: May graduation, graduate employers provide additional schools 1670000 - nearly 60 percent of all jobs in the past year included. Last year, the number between 25 and 34 years, employment rose a solid 2.5 percent.
Since recruitment occurred proportional appreciated in recent months, Wells Fargo chief economist John Silvia, that wages could be held down because many entry level workers to find low wages, work. His brief influx of average wages, while reflecting the growing workforce.
"Since we hired a lot of people in the last two or three months, in a large number of new workers are not paid and experienced workers will bring you," Silvia said.
Dig a little deeper and find other charges on grounds of age: The number of employees grew over 55 years an impressive 3.4 percent last year. But people can not benefit from increases in net wages before your salary potential years and probably maxed. The number of employees from 35 to 54 - the group most likely with the maximum payout delay age group - by less than 1 percentage point increase in the last year.
Reality Bites GLOBAL
No matter what the US economy to improve, American workers are still billions of skills of workers in China, India, Eastern Europe and other countries that were not part of the global economy, a decade or two.
Most of these economies and Japan and the rest of Europe, not to stumble competition is about jobs. The weak growth lowered interest rates abroad and inflation - and thus tempered wage growth - in many US competitors. This means that American workers compete continuous low wages.
Meanwhile, the dollar will rise relative to other currencies, making it the most expensive US products overseas. This limits the ability of US workers to get a higher wage. Many US companies to move operations overseas.
O'Keefe notes that this trend is less and less skilled workers in the United States. Software engineers, researchers and legal workers from the IT department to compete with lower-paid workers abroad.
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AP Auto Writer Tom Krisher contributed to this report from Detroit.
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