The jobs report beat expectations, but the most encouraging numbers are in the wages and participation rates.
Lagging pay has been a persistent economic mystery. But many economists expect wage growth to accelerate in 2018, especially if the unemployment rate continues to fall, forcing companies to compete to attract scarce workers.
Economists warned about reading too much into January’s strong wage numbers — several times during the recovery, wage growth has appeared to accelerate, only to fall back to earth. But they said there was little doubt that the latest numbers were an encouraging sign.
“People have been wondering when the wages are going to start to rise in response to this tightness,” said Catherine Barrera, chief economist of the online job site ZipRecruiter. “I think that over the first six months of this year, we’re really going to start to see the wages rise.”
“People who are marginally employable suddenly become highly employable in a period like this,” said Joseph Brusuelas, chief economist of RSM, a financial consulting firm.
The strong labor market is pulling workers off the economy’s sidelines. The labor-force participation rate — the share of adults either working or actively looking for work — has edged up recently, although it was flat in January. Diane Swonk, chief economist for the investment firm Grant Thornton, said she expected to see companies start trying to draw people into the labor force by letting them work from home or offering flexible schedules.