Paychecks in purgatory

By Mark Fadden

Special to the Star-Telegram

I know what you’re thinking…If this article is going to be an analysis of some Bureau of Labor Statistics (BLS) reports, I’m going to flip through a few pages to see where Bud Kennedy is eating this week and I’ll save this section for when I want to go nighty-night. But Fear Not Dear Reader! This article isn’t about boring analysis – okay, there will be a little of that. But you will also get a juicy reward for turning up the intensity on the left side of your brain by acquiring a few new knowledge nuggets you can use to dazzle acquaintances at your next social shindig. Oh, and we’ll learn a little bit more about our paychecks that could just help us the next time we go to the boss to bargain for better pay. Sound fair? I thought so. So let’s take a deep breath and wade into the statistical pool.

Buy the numbers?

The U.S. added 103,000 jobs in March, which was notably lower than the 178,000-ish that most economists were expecting, and the unemployment rate held steady at 4.1 percent (a historical low). What do these numbers mean? Well, by itself, to underperform the expectation by 42 percent would seem like a big deal. But one month doesn’t an economic cycle make. We must look at the latest jobs report in a broader context. While March may have been a bit off from expectations, it still marked the 90th straight months of job gains. Also, according to Mark Hamrick, senior economic analyst at, the slowdown in job growth is to be expected. “The job market is widely regarded to be close to full employment,” said Hamrick in a recent interview on CNBC. “So, hiring gains should be slowing at this point in the expansion.”

Is inflation finally back?

Okay, so while a leveling off in job growth seems par for the course after 90 months of gains, we do have something on the horizon that we may need to start worrying about when it comes to our jobs. It’s inflation. Yup, inflation isn’t something we’ve had to worry about in a long time. It’s like that third cousin once removed you haven’t heard from until you win the lottery and he comes a callin’ wanting you to invest in his idea for the next Snapchat. Inflation has been so far off the radar, we really need to dust off the definition of what it is to make sure we’re all on the same page. As defined by Investopedia, “inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.” All we need to do is pull in to our local gas stations to see an example of inflation smack us in the face. Gas prices have been on the rise lately, which is a simple case about supply and demand. But when we throw into the mix all of the geopolitical events going on – like tough talk on tariffs (try to say that five times really fast) and most of the world’s economies doing better, which allows them to buy more materials, thus pushing up demand and prices on said materials and voilà …inflation.

But wait, why are we talking about inflation? We started out with the March jobs report, then there was something about some crazy cousin and a Ponzi scheme or something, now it’s inflation. I know what you’re about to say… “I want my knowledge nugget and I want it now!” Well, here it is: When you wrap up job growth numbers and unemployment rates and inflation concerns, all of those things directly impact what most of us are really concerned about when it comes to our employment…wages.

What about wages?

Let’s face it, wages have been stagnant for a while. Back in February 2015, I wrote about the issue in this column:

“While four out of five Americans define themselves as middle-class, that group has seen a long, slow decline over the years. Middle-class wages have not kept up with the rising cost of living over time. To add a new concern, the latest economic expansion hasn’t acted like those in the past in terms of showing middle-class workers some love. 2014 showed strong hiring trends, which should have translated into a tighter hiring market where workers could demand higher pay, but it didn’t. For example, in Dec 1999, when the US economy was in the middle of an expansion much like the one we have today, the average hourly earnings rose 3.7 percent from the previous year. Fast forward to Dec 2014, and average hourly earnings rose just 1.7 percent from the previous year. At 1.7 percent, workers are barely staying even with the rising costs of living.”

Fast-forward three years and wages this March increased 2.7 percent from March 2017. Let’s shed some light on what that means by looking at a recent New York Timesreport that stated, “the bigger picture is that wage growth remains weaker than most economists would expect when unemployment is so low. Most still expect employers to have to raise pay eventually to attract and retain workers. But so far, employers are resisting.”

The combination of low wage growth and the possibility of inflation puts pressure on the purchasing power of our paychecks. A rise of 2.7 percent in wages from one year ago will certainly get eaten up by higher gas prices, higher food costs and higher costs on everything from clothes to furniture to you-name-it costing more if there’s a trade war with China. Plus, if you’ve been trying to buy or even rent a home or apartment lately, you are well aware that real estate prices in DFW are doing nothing but going up.

While hanging your negotiation for better pay on the inflation issue by walking into your boss’s office with a BLS chart under your arm wouldn’t be advisable, using the inflation argument as one of several arrows in your quiver when asking for a raise might be a good plan of attack. Combine it with data of how you’ve contributed to the organization along with timing it right (when the market demand for your position is high, not low) and you’ve got a pretty good shot at convincing your boss to up your pay.