Signs of Strong US Job Market to Spark Wage Increases

Signs of Strong US Job Market to Spark Wage Increases

The US stock market has had an up-and-down autumn, but things seem to have settled nicely for the economy. According to recent data, there has been relatively significant increases and growth in the US job market. And this is a good sign for investors looking at hot companies. It also means that wages may go up sooner than later, which would be a bolster to both the consumer market, and the overall health of the labor force. Wage increases cost businesses more money, but it’s also often a sign of a strong, stable economy.

When the job market is up, it becomes more competitive. It’s this kind of competitiveness that fuels growth, especially in emerging companies and new ventures looking for investment.

Follow the money
Where there’s smoke, there’s fire. In order to predict wage increases, you need to see a viable trend first. Evidence of a rebound in employee earnings is appearing in certain industries and regions, including Texas and North Dakota, which are riding the energy boom and the strengthening homebuilding market in the U.S. Southeast. While plenty of slack remains in the economy, raises are likely to filter to other areas as job creation whittles away at U.S. unemployment. And that’s a great thing for emerging businesses. A strong economy inspires investor confidence, and even better, a competitive workforce.

According to a recent interview in Bloomberg, the wage growth trend is worth watching. They quoted:

Wage growth is beginning to bubble up

said Mark Zandi, chief economist at Moody’s Capital Markets Group in New York.

It’s still nascent, early stages, but the labor market is now tightening to the point where we are beginning to see some stronger wage gains. This is the beginning of more definitive acceleration.

Money is being spread out more, and to a greater number of positions, which will be critical in developing the job market for sustainable growth and long-term stability. More jobs means better pay, and better pay means a greater talent pool. The jobless rate has dropped by 1.4 percentage points over the past year to reach a six-year low of 5.8 percent in October, and the number of jobs waiting to be filled in August and September were highest since early 2001.

How will an increased wage trend affect my company?
A strong company flourishes in a strong economy. So no matter how you look at the short-term cost to your business, the long-term benefits of a stable and competitive workforce are priceless. The demand for a quality workforce will generate better workers, and if you’re building your company from the ground up, this is something that’s critical for you to take advantage of. The economic climate that exists when the job market surges helps create a positive investment cycle.

When people earn more, and feel like they have long-term security, they are more inclined to invest. This goes for both businesses and venture capitalists. A climate of growth trickles down to nearly every aspect of a broad-scale economy. For example: As more people find work, the country experiences increased tax revenue. When people have jobs, they have disposable income to put back into the economy. The government can use this money to help pay down the long-term debts of the government and to reduce governmental borrowing.

While we can’t predict exactly how far wage growth will go, or how long the job creation climate can sustain itself, we do know that the economy is turning around for the better. If you’re looking for investment, a positive economic climate may be the missing piece you need to push your growth plan forward. We just need to be patient, and trust that market will stay its course, while planning for the future.

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