America’s working class has an unlikely advocate: Wall Street.
Long known for caring more about its own profits and bonuses than the minimum wage worker, even members of Wall Street are raising concerns about the snail’s pace at which wages are rising, according to The Wall Street Journal
’s E.S. Browning.
"Without a real acceleration in wages it is hard to get a meaningful pickup in consumer spending," senior Bank of America Merrill Lynch U.S. economist Michelle Meyer told the Journal.
Despite a U.S. economy that created more than 200,000 jobs a month for four consecutive months — a first since the late 1990s — the number of jobs is not even close to squaring with population growth, according to Browning. Seven million additional jobs are needed to account for the rise in working-age people since 2008, according to the Journal.
"Right now the economy doesn’t seem to be supporting" the forecast, Meyer said. "If we had seen 250,000 or more jobs created in May we would be convinced that the economy is picking up in speed. But we didn’t see that."
Despite employment exceeding pre-recession levels, payrolls fell by 8.7 million from January 2008 to February 2010, USA Today reported
. Since that time, non-farm jobs have risen by 8.8 million.
Compounding the problem, according to Jack Albin, chief investment officer at BMO Private Bank, which manages $66 billion in Chicago, new jobs usually pay less than pre-recession ones.
"New jobs are coming through at lower wages," Albin told the Journal. "Collectively, people have fewer dollars in their wallets, even though they have jobs again."
There’s a ripple effect that is impacting the housing market. New single-family home construction is running at less than 500,000 a month, half of what demographics dictate it should be, Albin said, and couples are waiting longer to get married and having fewer children.
"It is certainly making us a little more cautious on the economy," he told the Journal.
Consumer spending in April fell for the first time in a year, something economists are attributing to a combination of a brutal winter and slow wage growth. While they anticipate things picking up, some economists are getting nervous, many already reducing their yield forecasts.
Paul Dales, a senior U.S economist at research firm Capital Economics, has cut his forecast for the 10-year yield to 3 percent at year’s end, down from a previous prediction of 3.25 percent.
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