A worker stacks packaged bed frames at the Hollywood Bed Frame Company factory in Commerce, California. | Robyn Beck/AFP/Getty Images Tightening job market delivers wage boost

The tightening job market in August delivered workers the largest single-month wage boost in nearly a decade as the economy added 201,000 jobs, the government reported Friday.

Average hourly earnings rose 2.9 percent over the previous year — up from July's 2.7 percent and the biggest jump since June 2009.


The unemployment rate was 3.9 percent, unchanged from July.

The numbers paint an improving portrait of the economy two months ahead of the midterm elections, providing President Donald Trump a much-needed reprieve amid an onslaught of negative news from a new book by Bob Woodward and a New York Times op-ed by an anonymous senior Trump aide, both describing chaos and routine insubordination within the Trump White House.

Despite robust job creation and low unemployment, workers' pay in recent months had previously been shown barely to exceed inflation, and by one important measure to lag it.

The White House argued this week in a report by the Council of Economic Advisers that the Labor Department's previous dour reports on wage growth failed to capture the impact of bonuses and increases to fringe benefits, and that its reliance on the Consumer Price Index overstated inflation. By the White House's calculations, real average hourly after-tax compensation rose 1.4 percent over the past year.

But even using the White House's methodology (which prompted criticism from some economists), the recalculation showed that pre-tax compensation growth in 2018 had been slower than in 2017, making it difficult to argue that the December tax cut, persuaded employers to spend more freely on labor, as the Council of Economic Advisers predicted in February.

The Labor Department earlier reported that gains in full-time median weekly earnings lagged inflation during the first six months of 2018 compared to one year before, and also during the last three months of 2017. The average hourly wage increase, which is usually higher but less representative of typical workers than the median, remained about even with the Consumer Price Index.

Friday's wage news may allow the White House to rewrite that narrative — and give Republicans ammunition in the midterm elections.

“It is remarkable to see steady positive news regarding job growth month after month,” said Labor Secretary Alex Acosta in a statement.

The left-leaning Economic Policy Institute, in a statement, gave a softer assessment, saying the wage growth is “more promising than what we’ve seen in recent months, but we should expect more from the economy for working people.“



The Federal Reserve, meanwhile, indicated this week that it’s still on track to raise interest rates twice more in 2018, once this month and again in December, thwarting Trump’s requests to keep rates down.

The labor force participation rate — the share of people actively looking for a job — remained near 63 percent in August, close to its lowest level since the 1970s.

The unemployment rate was 3.9 percent, unchanged from July.

Analysts surveyed by Bloomberg had predicted the creation of 195,000 jobs, an increase in over-the-year hourly earnings of 2.8 percent and an unemployment rate down at 3.8 percent.

