Big jump in jobs numbers but wages have been stagnant

US employers added more jobs in 2014 then in any year since 1999 — but wage growth barely kept pace with inflation, calling into question the quality of the new jobs.

The strong year of job growth was capped by 252,000 new jobs in December, the Labor Department said Friday — a figure that beat most estimates.

It was the eleventh straight month of 200,000-plus job growth.

The unemployment rate, which is calibrated through a separate survey, fell two notches to 5.6 percent from 5.8 percent in November.

But a big part of the rate decline came from people dropping out of the workforce.

While the rate of job growth pleased most economists, wages — falling 0.2 percent, or 5 cents, to $24.57 — left them bewildered.

“Wage growth for the year was once again no higher than inflation,” said Harry Holzer, a former Labor Department chief economist who now teaches public policy at Georgetown University.

Holzer also noticed a troubling incongruity last month between the 111,000 increase in the total number of US employees and the 273,000 decrease in the size of the labor force.

In that context, at least, so what if the unemployment rate dipped from 5.8 percent to 5.6 percent? “Most of that was driven by people leaving the workforce rather than gaining jobs,” Holzer said.

The stock market, which in recent months has cheered job gains, appeared unimpressed Friday. The Dow fell 1.0 percent during the day’s trading session to close at 17,737.37 — in line with other major exchanges.

Michael Arone, chief investment strategist at State Street Global Advisors, acknowledged the job report’s mixed signals put the Fed “between a rock and a hard place,” but the ambiguity shouldn’t affect the Fed’s timing about an interest-rate hike.

“Don’t expect the top-line growth in jobs to push it forward, and don’t expect the slack in wages to push it backward,” he said, echoing a sentiment expressed earlier in the day by Federal Reserve Bank of Atlanta President Dennis Lockhart.

The December jobs report provided the first full picture of 2014, including other signs of a healthier job market:

• The unemployment rate declined by 1.1 percentage points in 2014, while the number of unemployed dropped by 1.7 million

• The number of long-term unemployed — those jobless 27 weeks or longer — eased by 1.1 million during the year to total 2.8 million

• The number of discouraged workers — those not looking for work because they believe, for them, nothing is available — fell by 177,000 to end 2014 at 740,000

Most important, though, was that the average monthly jobs increase of 246,000 in 2014, compared with 194,000 in 2013, has the country coming off its strongest year for employment gains since 1999.