Q4 numbers end with a dud for workers
The added compensation costs probably will mean some businesses will see revenues strained, Peter Bensen, chief financial officer of Oak Brook, Illinois-based McDonald’s Corp., said on a Jan. 23 earnings call.
“We’ve got national health care impacting 2015 for the first time,” Bensen said. “Especially in this first half of the year, U.S. margins will continue to be a little bit under pressure.”
The number of available positions at U.S. employers climbed to 4.97 million in November, the most since January 2001, Labor Department data showed earlier this month. There were 1.82 jobless Americans per opening, down from 2.62 in November 2013.
The latest figure is below the 2-to-1 threshold that typically leads to larger pay increases in about six months as employers compete for a shrinking talent pool, according to research by economists at UBS Securities LLC.
A net 17% of managers at small businesses said in December that they’ll boost wages, the most since September 2007, according to National Federation of Independent Business survey data.
Wages were one disappointing element in an otherwise brightening jobs market last year. Employers added an average 246,000 workers a month to payrolls, the best performance since 1999. The jobless rate sank to 5.6% in December, the lowest since June 2008, and close to the 5.2% to 5.5% that the Fed has defined as full employment.
A Bloomberg survey of economists shows workers will see higher wages this year as the job market tightens. Hourly earnings for employees on company payrolls will advance 2% to 3% on average, according to 61 of 69 economists surveyed Jan. 5-7. They climbed 1.7% in the year through December.
At the same time, the job market still has pockets of weakness. The share of jobless who have been out of work for 27 weeks or longer was 31.9% in December, more than twice the average in records dating to 1948.
Fed Chair Janet Yellen said last year at the central bank’s annual conference in Jackson Hole, Wyoming, that wage growth is understandably low because businesses that avoided trimming paychecks during the downturn are waiting longer to increase them.