The government’s latest jobs report showed the US economy added 528,000 jobs last month, with the unemployment rate falling to 3.5% from 3.6% the previous month. The surge in hiring took Wall Street by surprise: Economists polled by The Wall Street Journal had forecast just 258,000 new jobs last month.
Workers have bargaining power. “It remains one of the strongest job markets in 50 years,” said Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association. Job growth is fastest in the services sector: construction employment rose by 32,000 during the month, he added.
The average hourly wage rose 5.2% year on year in July to $32.27, the Bureau of Labor Statistics said – one of the fastest increases since the early 1980s. however, do not follow the consumer price index: 9.1% in June. But the core inflation rate, which excludes food and energy, rose 4.8% in June.
“Average hourly earnings rose faster than expected in July, in part due to flat labor market participation,” John Leer, chief economist at Morning Consult, told MarketWatch. “If the demand for workers doesn’t slow and the supply doesn’t rebound, wage growth will put more upward pressure on consumer inflation.”
So far, the jobs report is showing good news for workers seeking pay rises. “Strong demand for workers continues to drive up wages” said Fratantoni. “The unemployment rate fell to 3.5%, matching the low before the pandemic. With business demand for labor still strong, wage pressures are likely to persist.
How to ask for a raise
What if the jobs report made you more confident to negotiate your salary? A recent Harris Poll found that 66% of employees would prefer a 10% pay rise over an extra week of paid vacation, and 89% expect an annual raise, so asking your boss to argue shouldn’t be. be a complete surprise. .
However, when asking for a raise, there are several pitfalls to avoid and proven approaches worth taking. For starters, never use outside factors as the reason for a raise, such as a rent increase for a salary increase. Similarly, the duration of your presence in a company is less important than your performance.
Inform your boss of the nature of the meeting, prepare your scenario and tell him what type of raise you are looking for. Clearly describe all the goals you have achieved, and your plans to get more results for the business. Tell them why you are an asset and describe your unique skills and qualities.
““The length of your experience in a company is less important than your performance.””
PayScale, Glassdoor, and LinkedIn will give you an idea of the market rate for your work. Don’t be afraid to ask trusted colleagues. You are stronger together and they can give you an idea without giving their salary. If it’s $100,000 to $120,000, a colleague might say, “The high end of that scale.” Nudge, nudge, wink, wink.
And, finally, timing is everything, according to Morgan McKinley, a professional services recruitment consultancy. “When are the budgets established? When are salary increases historically granted? Consider the big picture when planning your raise request,” the company wrote in this blog post about negotiating a raise.
“If the company has successfully met the goals – which you contributed to – and budgets are being approved for next year, this is a really good opportunity to have a conversation,” Morgan said. McKinley, adding that the salary increase should at least be in line with or close to the current rise in the cost of living.
More fuel for the Fed to hike rates
Economically, the jobs report will likely further motivate the Federal Reserve to raise interest rates to temper inflation, currently at its highest level in 40 years. It’s a delicate balancing act: the Fed aims to prevent the economy from overheating without killing consumer demand and, therefore, job growth.
But he noted that would not lead to a less aggressive path of rate hikes from the Federal Reserve. The Fed has raised rates four times in 2022, and by 0.75 percentage points twice since the start of the year. He now has less reason to fear hurting the labor market with another big rate hike.
Leer agreed that this will ensure the Fed remains hawkish. “Demand for workers soared in July, far exceeding expectations,” he said. “Combined with lower gasoline prices, the economic outlook for the third quarter is starting to improve. Today’s numbers also increase the likelihood of more aggressive rate hikes from the Fed.
It also gives the Fed less reason to worry about plunging the economy into an immediate recession. Indeed, employment growth has averaged 437,000 jobs per month over the past three months, which explains the revised figures for May and June. “If you thought the economy was in a recession, you were wrong,” Leer said.
‘A clear sign that the US economy is not in recession’: Economists react to explosion in July jobs report
Rex Nutting: Workers are behind inflation with every paycheck, but that won’t reassure a Fed determined to stifle inflation
Hear Ray Dalio at the Best New Ideas in Money Festival on September 21-22 in New York City. The hedge fund pioneer has a strong opinion on the direction of the economy.