Dive Brief:
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The U.S. unemployment rate remained steady at 5% last month, according to the Labor Department’s April employment report, released Friday. Average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.53, following an increase of 6 cents in March.
- Overall, American employers added just 160,000 non-farm jobs in April, the fewest since September 2015, the Wall Street Journal notes. Retail employment was essentially unchanged, according to the Labor Department report.
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The government report tracks closely with a report from payroll services firm ADP released Wednesday, which found that U.S. companies added just 156,000 jobs in April. The reports are something of a disappointment: Economists polled by Reuters expected closer to 195,000 additional jobs.
Dive Insight:
Despite significant improvement in the overall U.S. economy, wages have failed to increase in recent years, particularly for lower- and middle-income Americans. That has worried economists, who’ve said the problem has contributed to the on-again, off-again recovery. Depressed wages for those income groups have also been consistently blamed for many retailers’ troubles, especially at discount stores like Kohl’s.
“We’re the most over-stored country, and there are several overwhelming problems,” Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates Inc., told Retail Dive earlier this year. “People have less money and this economy isn’t helping. You cannot double your number of people in poverty in 10 years, build more stores, and not have some kind of gigantic shakeout. Kohl’s is slowing down because the middle class is getting killed.”
It’s not clear whether new minimum wage laws being instituted across the country or market forces (or both) are responsible for the government’s healthier wage findings, but economists say that it bodes well for the U.S. economy regardless.
“We’ve hit a tipping point,” independent economist Diane Swonk told the New York Times. “It’s showing up in low-wage jobs, for waiters and waitresses, in retail and in leisure and hospitality. The good news is that we are re-engaging people who’ve been on the sidelines. The question is how far we can go.”
Wage increases cut both ways for retailers, of course. Some experts argue that paying workers better wages is an investment in all-important store workers, even in—or especially in—an era of technology-dominated retail operations. Other research has found that retailers also benefit when wages are higher because consumers are able to spend more freely.
A year after Seattle implemented its $15 minimum wage ordinance, a recent study commissioned by the city and conducted the University of Washington shows that fears of rising prices (including retail prices) by and large haven’t materialized. After surveying employers and workers and scanning Seattle-area commodity and service prices, researchers at UW's Evans School for Public Policy & Governance found “little or no evidence” of price increases relative to other communities.