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U.S. Added 313,000 Jobs in February; Unemployment Steady at 4.1 Percent

The Labor Department released its latest hiring and unemployment figures Friday morning, providing one of the better snapshots of the state of the U.S. economy.

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PATRICIA COHEN
, New York Times

The Labor Department released its latest hiring and unemployment figures Friday morning, providing one of the better snapshots of the state of the U.S. economy.

The Numbers

— 313,000 jobs were added last month. Economists had anticipated a gain of about 200,000.

— The unemployment rate was 4.1 percent, the same as in January.

— The average hourly wage grew by 0.1 percent. It grew by 0.3 percent in January.

The Takeaway

With President Donald Trump’s move to put tariffs on steel and aluminum imports and growing talk of a trade war, February’s numbers could establish a baseline to measure the impact of trade restrictions and retaliation over the coming months.

This report also clears the way for the Federal Reserve Board to raise the benchmark interest rate when it meets this month under its new chairman, Jerome H. Powell.

Job growth has been consistently strong. Even before this latest report, the three-month average job growth was roughly 200,000 a month. At the same time, other information released by the government this week showed initial jobless claims still near their lowest level in almost 50 years, suggesting layoffs are down and employers are trying to hold on to their workers.

That is why the wage figures are likely to have the greatest sway with the Fed. “There’s one really big story here, and that’s the average hourly earnings,” said Jonathan Golub, chief U.S. equity strategist at Credit Suisse.

The jump in January — which pushed the year-over-year figure to 2.9 percent, from 2.3 percent just three months earlier — was cited as a cause of a market sell-off.

While the signs of stronger wage growth have been welcomed by workers, they have fueled inflation worries on Wall Street and speculation that the Fed might raise rates at least four times this year, rather than the three increases expected. “That’s where the conversation will turn,” Golub said.

Ellen Zentner, chief U.S. economist at Morgan Stanley, agreed. The January report was “a pretty positive backdrop for household income, in stark contrast to last year, when wage growth was stagnant and income growth was slowing on a year-over-year basis.” Still, she added, it “reset expectations that we are in an environment where the labor market is tighter and inflation is more likely.”

Inflation fears would be dampened if productivity numbers were to rise more sharply. When that happens, companies can pay workers more without eating into their bottom lines. But if productivity doesn’t improve, competition that drives up wages would end up trimming corporate profits.

While some companies have prominently announced worker bonuses this year after the signing of the tax bill, those kinds of rewards — as opposed to pay raises — are not counted in the average hourly wage calculations by the Bureau of Labor Statistics.

Bidding for workers

Corporate executives have long complained about the difficulty of finding workers, particularly in sectors like construction and trucking. Economists have generally reacted with skepticism, arguing that if there were really a shortage of qualified workers, companies would be raising pay to compete for talent. There are growing signs that this is at last the case.

“For years and years, the trucking companies said they couldn’t find drivers, but they wouldn’t raise wages,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “Well, now they are.”

Competition for drivers has become fierce. Swonk said she had heard reports of trucking companies paying drivers six-figure salaries, plus $20,000 signing bonuses to lure them from competitors. Companies are also offering to train new drivers — even though many end up being poached by other companies. “They’re still losing them to other places,” Swonk said.

As for the construction industry, Jed Kolko, chief economist at Indeed, an online recruiting site, noticed a significant increase in job postings over the past week without a corresponding response from applicants.

“It’s a good example of where demand on the employer side is going, but it’s not being matched by job-seeker interest,” he said.

The mismatch could grow significantly under Trump’s plan to encourage local, state and private investment in infrastructure. “If there is public interest in infrastructure, where do workers come from?” Kolko asked. “Does that end up bidding up construction wages and competing with other kinds of construction activity already underway?”

Those left behind

In contrast to the multiple indicators of a tightening labor market, a persistent lack of employment among large numbers of working-age men continues to shadow the economy.

Although large economic differences across regions have always been a characteristic of the United States, that gap appears to be widening instead of narrowing. In a paper published in the latest edition of the Brookings Papers on Economic Activity, economists Benjamin Austin, Edward Glaeser and Lawrence H. Summers argue that the disparities are sharp among three regions: the prosperous coasts; the Western heartland, which has natural resources and higher education levels; and the Eastern heartland.

This last area, which extends from Mississippi to Michigan, generally east of the Mississippi and not on the Eastern Seaboard, is suffering from a glut of social and economic ills, including joblessness, disability, opioid-related deaths and rising mortality, the three Harvard University economists said.

“The income and employment gaps between three regions are not converging, but instead seem to be hardening,” they write. “America appears to be evolving into durable islands of wealth and poverty.”

Rather than moving to higher-income areas to take advantage of the increased employment opportunities, people remain stranded in areas that are economic dead ends. There are many theories about the cause, but rising housing costs certainly deter moving, as does the difficulty of transferring assistance like Medicaid across state lines.

A lack of employment is a greater problem than income inequality, they argue, citing evidence that suggests “misery haunts the lives of the long term not working.”

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