For the first time since 1997, the job market has seen more than one million new jobs created over the last three months. This is the most significant indicator of economic growth to come. The last five years have been volatile, with many finding it difficult to find appropriate work at livable wages. The accelerated job growth rate is the most promising indicator that our economy is finally emerging from the doldrums of lackluster growth.
Although the indicators of economic growth are not spread worldwide, the trend in the United States is flourishing. This trend is positive for workers who are currently employed but have not had the benefit of any significant wage growth. Leverage on salary and hourly rate negotiations are moving in the direction of workers. As the unemployment rate continues to decrease, the pool of qualified workers is being reduced. This will encourage employers to give existing workers raises either for retention purposes or to reduce the cost of training new workers whose performance may not be known until a significant investment of time and money occurs.
Typically, US consumers fuel the world’s economies through consumption and consumer spending. And because of the strength of the domestic job market is so strong, the Federal Government feels more comfortable raising rates. The criterion they are monitoring is wage growth, which climbed 0.5% in January (up 12 cents to $24.75 per hour and 2.2% over the past 12 month). Combined with hiring momentum, the indicators of growth the Fed has been monitoring make a case to raise interest rates.
Prior to the great recession caused by the financial crisis, and ensuing federal regulation, growth rates in the US were approximately 3% per annum. At 3% per year, the growth rate was deemed positive and indicated a stable and growing economy. Currently, growth is approaching 2.5% and is encouraging economists that this will not be a cycle where there a growth spurt is followed by a decline. One of the indicators economists are hanging their hats on is that workers have started to leave jobs in search of higher pay. This indicates that employees have confidence in the economy, and that moving to a new employer does not bring the risk of layoff should growth rates drop. Employees believe that the economy will continue to grow and their job stability is not at risk.
Of course, there are still headwinds that face the US economy, but it is more sector-related. Construction, manufacturing and healthcare are all major sectors of our economy that are hiring new workers. It is time to harness this growth and bid on new contracts, create product line extensions to sell more goods or services to your existing customers, and find new companies that will benefit from working with you.
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