Jobs Report: Unemployment Falls, Wages Rise for U.S. Workers

So far, 2015 has been a year of better-than-predicted drops in the unemployment rate as well as steadily rising wages across several job sectors, signalling more good news for U.S. workers and consumers.

According to a January 13 Fiscal Times article, the unemployment rate has now reached 5.6%, which is closer than ever to the Federal Reserve’s ideal range of long-term unemployment, 5.2 to 5.5%. With the Congressional Budget Office’s natural rate of unemployment at 5.5%, the current unemployment rate seems to show good signs for the economy.

But if unemployment continues to drop at its current pace, the U.S. jobless rate will easily fall to just 5% by the summer — the Federal Reserve’s goal for the end of 2016. By the end of this 2015, it could fall as low as 4.7%.

Lower unemployment is good for everyone, right? Not necessarily.

These faster-than-expected drops in the jobless rate could place pressure on the Feds to raise interest rates sooner and more aggressively than the market is equipped to handle.

However, this hiccup of a tightening labor market might ultimately be absorbed without issue — as payrolls continue to dole out more attractive wages to U.S. workers. According to the Fiscal Times, inflation-adjusted take home pay, or the amount of money one has left over after taxes are taken from a paycheck, surged forth in a big way last month.

If this trend continues, it could give middle-class Americans a much-needed financial respite, and would increase their spending power to levels not seen since before the recession hit.

For example, the average managerial accountant can usually expect to earn between $77,000 and $101,500 per year. With “real payroll income growth” — an aggregate measure of job creation, hours worked and hourly wages — rising at a current annual rate of 4.5%, it’s safe to say that the salary for these accountants would get a major boost in disposable income and spending power.

So while the Federal Reserve could soon come under unexpected pressure due to greater-than-expected job creation, the American worker won’t feel much of that impact in 2015.

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