More and more jobs but incomes not budging

There are interesting parallels between the US and Irish economies, at least in one respect. Both have been adding job numbers. And in both, average earnings have been slow to rise.

The latest US figures show a healthy 242,000 jobs added in February, well ahead of market expectations. Shares rose as a result and it is noticeable that fears of a significant US slow-down, much discussed in the market turmoil of January and early February, has disappeared into the background.

The talk now is of when the Fed will raise rates, even though most still feel that it will avoid doing so this month. We will know soon enough.

However, like Ireland, earnings have been slower to rise and the downside of yesterday’s figures show a 0.1 per cent fall in average hourly earnings during the month. You would think a jobs market where unemployment was under 5 per cent would be showing earnings growth, but it just ain’t so, and this is a key factor playing into the presidential election. As in Ireland, talk of keeping the recovery going is highly unlikely to cut it.

Here, the figures have some similarities. Our jobless rate is higher but Ireland, too has been adding jobs. However, earnings have been slow to rise. There was a jump in the last quarter – and surveys do suggest pay is on the up this year – but CSO data show hourly earnings down 0.4 per cent year on year, with a rise in take-home pay only coming from longer working hours. Modern economies can create more jobs, it seems, but rising living standards across the board is a key economic – and political – issue.