Christian Science Monitor: What the new job numbers don't say

By Laurent Belsie
Christian Science Monitor, August 5, 2016

The big economic news Friday was that the United States economy added 255,000 new jobs in July, more than expected. But beyond the much-touted employment numbers was another development that offers at least a spark of hope for American workers: Wages are growing at their strongest annual pace in seven years, according the Labor Department figures.

The wage gains are still modest. Hourly earnings have risen 2.6 percent during the past year, faster than inflation but hardly robust growth. The question now is whether the report sets the stage for stronger growth or points to a new normal of solid but unspectacular improvement.

One hopeful sign is that a bevy of high-profile companies in the past six months have raised or announced they will raise wages. Also, when employers do raise pay, some are seeing improved morale and more productivity. ...

Raising salaries, bigger benefits?

That’s the case for McDonald’s, which last year raised wages 10 percent (from $9.01 to $9.90 an hour) and allowed workers to earn up to five days of paid vacation a year. (The move only covers the 10 percent of workers at company-owned stores. Most McDonald’s restaurants are owned by franchisees.)

This past March, the restaurant chain’s president of US sales told analysts the move had reduced employee turnover and raised customer satisfaction. The company’s stock is up some 20 percent since the pay raises went into effect.

Wal-Mart, which boosted pay to $9 an hour last year and $10 an hour this year, reports seeing more of its employees spending money in its stores.

The moves don’t come close to meeting activists’ calls for a $15 an hour minimum wage. But in California, which is slated to move gradually toward a $15 minimum, the pay raises already enacted have helped improve business, according to Bill Phelps, co-founder and chief executive of Wetzel's Pretzels, a California fast-food chain. When California raised the minimum wage from $8 to $9, same-store sales increased by 8 percent, he told CNBC earlier this year. When the wage went to $10, sales rose 7 percent. ...