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    Friday, April 26, 2024

    Wages poised to rise as signs point to improved job market

    New York - More than five years into the economic expansion, the signs that economists look for to herald the pickup in pay that has long eluded American workers are starting to emerge.

    Wages and salaries climbed last quarter by the most since 2008 as a dwindling number of unemployed per job opening approached a tipping point. Amid rising profits and sales per employee, some companies have a cushion to boost compensation.

    Evidence of a rebound in employee earnings is appearing in certain industries and regions, including Texas and North Dakota, that are riding the energy boom and the strengthening homebuilding market in the U.S. Southeast. While plenty of slack remains in the economy, raises are likely to filter to other areas as job creation whittles away at U.S. unemployment.

    "Wage growth is beginning to bubble up," said Mark Zandi, chief economist at Moody's Capital Markets Group in New York. "It's still nascent, early stages, but the labor market is now tightening to the point where we are beginning to see some stronger wage gains. This is the beginning of more definitive acceleration."

    At Houston-based Camden Property Trust, one of the biggest U.S. apartment owners, half of 14 projects under construction or being leased for the first time are as much as six months behind schedule because "we don't have enough workers," Chief Executive Officer Ric Campo said.

    "We have had situations where people have pulled up and said 'Hey, I'll pay you $100 cash right now if you come to my job,'" Campo said. He estimated that labor costs are helping boost building expense 5 percent to 15 percent.

    Jockeying for Houston workers goes beyond energy, according to Ray Perryman, president of Waco, Texas-based economic consultant Perryman Group. Construction and even restaurant employees have received signing bonuses, he said.

    The dearth of pay raises since the recovery began has puzzled economists and surfaced as an issue in the midterm elections. Even as unemployment fell and the economy created jobs, inflation-adjusted compensation per hour rose by only 0.7 percent over the last five years, the weakest growth for any expansion of comparable length since World War II, according to Bureau of Labor Statistics data compiled by Bloomberg.

    The most likely culprit, many economists said, was the continuing drag of millions of long-term unemployed people as well as those toiling part-time. That has allowed companies to staff without having to offer fatter paychecks.

    Now, the strengthening economy is starting to tighten the labor market, putting pressure on some companies to offer more raises to retain and recruit workers.

    Employment costs over the past two quarters rose 0.7 percent, according to figures from the Labor Department. The gain in the third quarter was led by a 0.8 percent advance in wages and salaries for civilian workers that was the biggest since the second quarter of 2008.

    The jobless rate has dropped by 1.4 percentage points over the past year to reach a six-year low of 5.8 percent in October, and the number of jobs waiting to be filled in August and September were highest since early 2001.

    About two jobless workers were pursuing each opening in September, the fewest since early 2008.

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