The U.S. added 252,000 jobs in December—the 11th-straight month that payrolls have increased by more than 200,000. Unemployment fell to 5.6 percent and revisions to October and November showed that the economy created 50,000 more jobs in those months than previously reported. For all of 2014, employers added 2.95 million jobs, the most in a single year since that figure surpassed 3 million in 1999.
Despite those promising numbers, many were dismayed to see that the wage gains the U.S. registered in November hadn’t kept up in December, when average hourly earnings ticked down 0.2 percent. Economists look at wage growth as a mark of whether the labor market is getting “tight,” or competitive enough for employers that workers can negotiate for higher salaries. While increased pay probably seems like a good thing, some economists worry that too many raises too quickly could be problematic. For starters, worker bargaining could lead to dangerous inflation. An uptick in wages could also indicate that the labor pool has essentially shrunk to exclude the millions of long-term unemployed, indicating that they won’t ever get hired again.
And so actually, the downturn in hourly earnings that some are bemoaning is what’s causing others to declare this latest jobs report amazing—because especially at the lower end of the income ladder, putting people back to work is much more important than a bit of wage growth. The fate of the long-term unemployed is still an open question, with their numbers essentially unchanged at 2.8 million in December. But as economist Justin Wolfers explained on Twitter, “Point is the data show we can get millions of people back to work without generating wage inflation. This is worth celebrating.”