WASHINGTON – The U.S. finished its best year of job growth since 1999 with brisk hiring and a drop in unemployment last month, but there's little indication that workers will start seeing wages go up much any time soon.
Employers, led by professional services and the construction industry, added a solid 252,000 net new jobs last month, the government said Friday. The report showed that the U.S. remains unfazed by weakness in the global economy, notably Europe and Japan.
The nation's unemployment rate fell by a bigger-than-expected 0.2 percentage point to 5.6 percent in December, although that was largely because people left the labor force. The latest jobless figure is down from 6.7 percent a year earlier and the lowest since June 2008.
The American labor market and economy have gathered steam in recent months, aided by plunging energy prices that have boosted consumer spending. Friday's report from the Labor Department buttressed analysts' forecasts for healthy job gains this year.
"It looks like small-business owners are finally shaking off the effects of the recession," said William Dunkelberg, chief economist for the National Federation of Independent Business. The number of those self-employed also has increased in recent months.
But the outlook for the average worker's earnings, which have stagnated for years, is less optimistic. Despite the relatively low jobless rate, which some economists think signals an economy nearing full employment, there's been little evidence thus far that wage pressures are building.
In December, average hourly earnings for all private-sector workers fell 5 cents to $24.57, almost reversing the 6-cent gain in November that had raised hopes of a long-anticipated sustained rise in pay. On average, last month's hourly pay was up 1.7 percent from a year earlier, a tad above the inflation rate.
"I'm struggling," said Chuck Suntalus, an acupuncturist and herbalist in El Monte in the Los Angeles area, noting that he hasn't had a raise in two years. Although he understands that his employer's finances are tight, the 33-year-old said he may have no choice but to quit and start his own business.
The muted wage growth suggests that the unemployment rate is understating the weakness in the job market — that there is still a lot of slack in the economy, or supply of available workers.
The amount of slack has been a major consideration in the Federal Reserve's cautiousness about raising its benchmark interest rate, which has been pinned near zero since December 2008.
Friday's wage numbers strengthened Wall Street's view that the Fed will not begin lifting the interest rate until its June meeting, at the earliest.
Besides the lagging growth in earnings, December saw little improvement in the high share of long-term unemployed and workers stuck in part-time jobs.
What's more, separate Labor Department figures show the quit rate of employees has stayed low, even as layoffs have receded sharply in recent months.
That's a sign that workers remain wary about jumping to another company, which is typically how workers can get a big bump in pay.
"The winnowing of people at the middle levels has created downward wage pressure," said Sean Scanlon, managing director of the Los Angeles branch of executive search firm DHR International. Those employees left are "willing to trade a little less base pay for stability, a positive work environment and the possibility of growth."