By Tom Ozimek
The GOP and the Republican National Committee (RNC) have sharply criticized the Biden administration for the drop in American workers’ real wages and the lackluster job creation numbers revealed in Friday’s closely-watched non-farm payrolls report, which showed September’s job growth to be the slowest all year.
Labor Department data released on Oct. 7 showed that American employers added 263,000 jobs in September, the lowest number since January, when the economy added 233,000 positions.
“Today’s jobs report showed job creation slowing for the second month in a row. In fact, this was the fewest number of jobs created this year. But what’s not slowing down? Inflation,” said the RNC Rapid Response Director Tommy Pigott in a statement.
Inflation, as measured by the headline Consumer Price Index (CPI) hit a recent peak of 9 percent year-over-year in June, before edging down to 8.5 percent in July and 8.3 percent in August.
Core CPI, which strips out food and energy and is seen as a measure of underlying inflation, hit a recent peak of 6.4 percent in March. It fell steadily to 5.9 percent in July before picking up again to 6.3 percent in August, suggesting inflationary pressures were again building.
Besides putting a cost-of-living squeeze on American households that hurts lower-income earners the most, inflation has also far outpaced nominal wage gains for the average worker, effectively giving them a pay cut.
American Workers ‘Really Struggling’
A recent report from the Dallas Fed showed that more than half of U.S. workers over the past year saw their real wages—which are adjusted for inflation—fall below zero. For the 53.4 percent of the American workforce whose wages were outpaced by inflation, the median wage decline was 8.6 percent.
Another stark statistic on Americans’ real wages was recently shared by San Francisco Federal Reserve chief Mary Daly, who said people are now “really struggling” and their “purchasing power is falling.”
“Some little-known statistic that I think is really worth bringing up, real wages, adjusted for inflation, the average worker in America has lost 9 percent over the course of the last two years,” Daly told the outlet.
“That’s not a good time to be a worker right now,” she added.
Friday’s nonfarm payrolls report showed that average hourly earnings grew by 5 percent in annual terms in September. That’s before adjustment for inflation, with headline CPI expected to come in at 8.1 percent in September when the data is released on Oct. 13.
If the forecasts for CPI inflation hold, it’ll mean American workers had their wages effectively slashed by 3.1 percent.
‘Encouraging Sign’ vs. ‘Leaving Families Behind’
President Joe Biden took to Twitter on Friday to call the job creation numbers “an encouraging sign” that the economy is moving toward “stable, steady” growth.
“There’s more to do to grow our economy from the bottom up and middle out, but we’re making progress,” Biden said in the message.
In a statement, House Speaker Nancy Pelosi (D-Calif.) called the figures “further proof that America remains on a path of strong, sustainable job growth.”
The GOP offered a different take.
“The September jobs report is the worst jobs report of the year and the second fewest jobs added since the COVID recovery began. Biden’s economy is leaving families behind,” the GOP Twitter account said in a post.
Bankrate Senior Economic Analyst Mark Hamrick offered a nuanced view of the job creation numbers, telling The Epoch Times in an emailed statement that Friday’s report “portrays stability in the job market” but that it also makes clear that “hiring cooled during the month.”
While the 263,000 added payrolls were above market predictions, the number remains “well below the average monthly payrolls gain over the previous 12 months,” he said.
Hamrick said the Federal Reserve will weigh the relatively tepid job creation numbers—along with other labor market data—and consider them against “still hot inflation pressures.”
The Fed will likely conclude it will need to continue to boost interest rates, he said.
Wall Street’s main stock indexes tanked following the release of the jobs report, perhaps on bets that the Fed would remain on a hawkish tilt and a pivot remains far off.
“The markets are worried that the Fed is going to rely on information like this that’s really a month old and they’re going to overshoot and kill the economy,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
“Investors don’t have confidence in a soft landing because the Fed continues to have to ramp higher and higher to begin to slow the economy down,” Forrest added.
One labor market data point the Fed tracks closely is the mismatch between job openings, which at last count were 10.1 million, and the 5.8 million or so unemployed persons in the United States.
Analysts say the Fed is likely to keep hiking rates until it brings these two numbers into closer alignment.
Fed Funds futures contracts put the odds of another big 75-basis point rate hike in November at 82 percent.