US adds 145,000 jobs; unemployment holds at 3.5%
But annual wage growth was down to 2.9 percent from 3.3 percent a year earlier.

By Josk Boak
Tampa Bay Times
Published: Jan 10, 2020

WASHINGTON - U.S. employers added 145,000 jobs in December and the unemployment rate held steady at 3.5 percent, signaling that the job market remains strong at the start of 2020 even if hiring and wage gains have slowed somewhat more than a decade into an economic expansion.

Friday's snapshot from the Labor Department showed hiring slipped from robust gains of 256,000 in November, which were given a boost by the end of a strike at General Motors. For the year, employers added an average of roughly 175,000 jobs per month, compared with about 223,250 per month in 2018.

Annual wage growth fell in December to 2.9 percent, down from an annualized average of 3.3 percent a year earlier, a possible sign that some slack remains in the labor market and that unemployment could fall even further from its current half-century low.

The picture of a slowly-but-steadily improving economy - plus low inflation - likely gives the Federal Reserve comfort in keeping interest rates low, which has been a boon to stock markets. The Dow Jones Industrial Average was largely unchanged in Friday morning trading, but it briefly reached the record-level of 29,000.

"We're starting 2020 in very good shape," said Gus Faucher, chief economist at PNC Financial Services. "We should see continued economic expansion throughout 2020 driven by consumers."

The state of the job market has become a pivotal division between President Donald Trump and his Democratic challengers. Trump can campaign on the low unemployment rate and job growth as he seeks a second term. Democrats, seeking to oust him, will point to wages that have not taken off in a meaningful for many Americans coping with highs costs for medical care and higher education.

This is the last jobs report before the Iowa caucus in February that will serve as a first step for choosing the Democratic presidential nominee.

The prospect of a stable job market, a pick-up in global growth, supportive central banks, an easing of trade tensions and U.S. economic growth of around 2 percent should be a positive for this year.

"We really have the wind at our backs going into 2020,” said Julia Pollak, a labor economist at the employment marketplace ZipRecruiter.

Yet job growth has failed so far to translate into substantially better hourly pay. The pace of annual average wage growth slowed in December to 2.9 percent from 3.3 percent a year ago, a possible sign that there is still room for additional job gains despite the decade-plus expansion that has reduced the number of unemployed Americans. There is also the potential that wages jumped in January as many states adjusted their minimum wages.

Some businesses in competitive industries are already taking steps to prepare for wage competition this year. The Big Blue Swim School based in Chicago vies with day cares, learning centers and gyms for its instructors. The chain has five sites employing on average 30 people and plans to open five more schools this year and 17 in 2021. But it had to dramatically boost wages in order to attract staff for that expansion.

"We gave all of our front-line employees a 10 percent or 11 percent raise because of the fear we have about the wage pressures in the economy,” said CEO Chris Kenny. "We can't meet our business goal without great staff.”

The U.S. economy added 2.1 million jobs last year, down from gains of nearly 2.7 million in 2018. Hiring may have slowed because the number of unemployed people seeking work has fallen by 540,000 people over the past year to 5.75 million. With fewer unemployed people hunting for jobs, there is a potential limit on job gains.