(16 November 2020) Changing jobs can be a challenge in normal times and even more challenging during COVID-19, which means that labor markets are not as fluid as we might wish. Personal choices aside, thousands of workers have potentially elevated risks of contracting COVID-19 since they do not have the luxury to choose to work from home, particularly in industries with lower wages and formal educational requirements. According to the US Bureau of Labor Statistics: 70%+ of employees in the financial and professional and business services industries reported that they could telework. The average salary in these industries exceeded $110,000 per year in 2019. 36% of employees in manufacturing and 27% of wholesale and retail trade workers could work from home. The average annual wage in these two industries was $70,000 and $40,000, respectively.10.7% of workers with less than a high school diploma can work from home, a large difference from the 67.5% with a bachelor's degree and higher who reported that they had the option to work from home.
Economy Added Less than Expected Workers US labour market added 136,000 non-farm employments in September 2019, below market expectations. The US Bureau of Labor Statistics revised employment figure upward from 159,000 to 166,000 for July and 130,000 to 168,000 for August. Through the first nine months of 2019, the economy added an average of 161,000 workers per month, a marked drop from last year’s average of 223,000 workers per month. Manufacturing sector has been a key factor behind the slowdown in employments as reflected by ISM’s manufacturing PMI reading which was lowest in September since 2009. The sector has cut the jobs in last month for the second time this year. The services sector, accounts for a much larger portion of the economy than manufacturing, has been still expanding. Industries, including health care, transportation and business services, added jobs in September 2019.
The US economy has been creating jobs at a moderate pace over the last few years while real wage growth remains largely flat during this expansion. The unemployment rate has fallen to as low as 4% in June 2018, while the average hourly wage growth ticked up to 2.77%. Notwithstanding the slight tick up in hourly wage growth last month, real wage growth has been anemic in spite of low unemployment rate for some time now. The current relationship between unemployment and wage rate are not in line with Phillips curve, an economic theory showing the inverse relationship between inflation and unemployment. Tight labor markets have historically tended to place upward pressure on wages and inflation. Yet U.S. consumer prices and wage inflation remain modest despite a nearly eight-year U.S. economic expansion and an unemployment rate that has already dropped below the Federal Reserve’s estimated “natural rate of unemployment”. This situation has perplexed many researchers until now. It is likely that some transient factors not visible are playing role in keeping wage growth moderate. However, mix of strong factors like baby boomer retirement, every day 10000 retiring and expected to continue 2030 as per American Association of Retired Persons (AARP) research, a decline in the rate of union membership for private-sector employees to 6.5% in 2017 from 16.8% in 1983 (Bureau of Labor Statistic), contract restrictions prevented workers from shifting their jobs for better and highly paid, Lagging minimum wage which is currently at $7.25 an hour has not increased since 2009, automation and globalization have both made it easier for business to find cheaper alternative, outsourcing. Though, it is unlikely that such factors will be able to keep the wage growth subdued amid low rate of unemployment for long. The statements from the Federal Reserve reflect this concern.
In December 2018, average hourly earnings in the United States increased by 3.2 percent from December 2017, the highest rate increase since May 2009. In addition, due to low inflation American workers saw the largest improvement in real hourly earnings since August 2016. Wages grew because the labor market tightened, as indicated by the historically low unemployment rates. Since rising wages, in general, mean higher inflation, the Federal Reserve may respond by increasing interest rates to stall business demand for labor and, consequently, wage growth. The Fed increased rates four times last year. Yet given current conditions, including inflation that’s within the Fed’s target range, slowing global growth, and a strong labor market, the central bank may opt to postpone another hike. If the Fed keeps interest rates flat in 2019, watch for continued record growth in real wages.
This dashboard illustrates characteristics of minimum age workers in the United States in 2016. According to the Bureau of Labour Statistics Report approximately 1.5 million of workers aged 16 and older in the US earned below the federal minimum ($ 7.25 per hour). Last year Texas was leader by quantity of nation’s most minimum-wage workers and quantity of workers paid at or below minimum wage: wages of 141 thousand workers were lower than federal minimum and 242 thousand of workers earned the federal minimum wage or less. But Texas took only 13th place in the rating among sates by share of workers paid below minimum wage. Leadership position in this category belong to South Carolina.
Source: http://nrega.nic.in/netnrega/home.aspx