WASHINGTON >> Years of steady job gains have finally begun to benefit a wider range of Americans, including those with less education and in lower-paying jobs.
A second straight month of robust hiring — 255,000 jobs added in July — pointed to employer confidence that suggested the economy is powering through a slump that struck early this year. The unemployment rate remained a low 4.9 percent, the Labor Department said Friday.
(In Hawaii the unemployment rate for June was 3.3 percent with an increase of 3,600 nonfarm payroll jobs over the previous month. July numbers will come out Aug. 19.)
Hiring has been solid for six years, but for most of that time there were caveats: Average hourly pay was stagnant, and millions were no longer working or looking for work, leaving a smaller proportion of adults in the labor force.
Evidence is emerging that those long-running weak spots are finally improving. Many businesses are offering higher pay to attract workers as competition to fill jobs heats up. Average pay is up 2.6 percent from a year ago — matching the best 12-month gain since the Great Recession ended in 2009 and comfortably above inflation of just 1 percent.
The resilient job market is encouraging more Americans to begin looking for a job — a key trend that helps offset a drag from the growing retirements of aging baby boomers.
Taken together the two trends suggest that the economic recovery, now 7 years old, is finally benefiting a broad spectrum of the population.
Economists at Goldman Sachs have found that pay for workers earning less than $12.50 an hour has risen 4 percent in the past year, more than for any other income group. Those earning from $12.50 to $20 an hour have received the next-biggest increase, at just above 3 percent. Higher minimum wages might be bumping up pay for workers further above the federal minimum of $7.25.
“Wage growth figures indicate that the tide is turning,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the conservative American Action Forum.
Stock investors seemed pleased by Friday’s job figures, which raised hopes for the economy without seeming to compel the Federal Reserve to resume raising interest rates soon. The Dow Jones industrial average closed up 1 percent, and the Standard & Poor’s 500 index and the Nasdaq composite both set record highs. Many Fed watchers think the central bank will raise rates this year but probably not before December.
The jobs report also suggested that employers were unfazed by either Britain’s late-June vote to quit the European Union or the U.S. economy’s tepid growth in the first half of the year, just 1 percent at an annual rate. Most analysts expect the solid hiring to help fuel an economic rebound in the second half of this year.
Consumers, who have driven the economy’s post-recession expansion, ramped up spending in the April-June quarter at the second-fastest pace since the recession. Their spending, though, has been offset by a slowdown in business spending on machinery and equipment.
The economy’s average annual growth rate since the recession ended in June 2009 is just over 2 percent, the slowest since the 1930s. But job growth — the backbone of the economy — has fared much better: 2014 and 2015 notched the fastest two-year hiring gains since the late 1990s.
Part of the disparity is explained by slow growth in worker efficiency since the recession ended. Stronger hiring amid a weak expansion suggests that the economy has grown less productive, with workers delivering less output per hour.