For blue-collar America wage gains are slim even as employment surges

Fri Feb 6, 2015 11:31am EST
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By Jason Lange

WASHINGTON (Reuters) - America has added more than a million jobs in the space of three months but wages, especially for blue-collar workers, are showing few signs of gains.

The Federal Reserve is following wage increases as well as employment numbers as it weighs whether to raise interest rates this year, and strong job creation data released on Friday shifted Wall Street bets on the timing of a hike to September from October.

Hourly wage rates rose a sturdy 12 cents last month, but wages were up only 2.2 percent from a year earlier, a historically slow pace. Employment agencies, which play an increasingly large role in supplying workers to America's companies, say a surplus of labor is holding back wage gains, particularly for blue-collar workers.

"The supply of unskilled labor is still pretty plentiful," said George Corona, chief operations officer at Kelly Services KELYA.O, one of the country's largest providers of temporary employees for light assembly plants and distribution centers.

The current pace of growth in salaries is far from the rates seen before the 2007-09 recession of 3-4 percent a year. In January, factory workers earned 1.2 percent an hour more that a year earlier, while construction workers got 2.3 percent more.

Rising demand for labor on the back of a stronger domestic economy helped drive a 7 percent gain in Kelly's fourth-quarter U.S. revenues from services, up from 3.6 percent in the third quarter.

Even for occupations that typically require a college degree, like engineers and lawyers, salaries still aren't rising as quickly as they would in a tight labor market, Keith Waddell, the chief financial officer at staffing firm Robert Half RHI.N, said in a call with analysts on Jan. 29.

Robert Half, which primarily places professionals and reported a 14 percent increase in U.S. staffing revenues in the fourth quarter, has been seeing wage gains just above 3 percent. It expects increases closer to 6 percent when the labor market tightens.   Continued...

A man fills out paperwork before a screening session for seasonal jobs at Coney Island in the Brooklyn borough of New York March 4, 2014.  REUTERS/Shannon Stapleton