(Bloomberg) -- Millions of Americans have gone back to work since the last recession. Now they’re finally getting some decent pay raises.
Average hourly earnings of workers climbed 2.8 percent in October from a year earlier, the fastest pace in seven years, Labor Department figures showed Friday in Washington. Rising wages are encouraging people to look for greener pastures: Among the unemployed, the share of people leaving jobs voluntarily jumped to 12.1 percent, the highest since before the financial crisis began in 2007.
The monthly jobs report also showed payrolls rose at a steady pace and the broadest rate of unemployment fell to an eight-year low, encouraging signs for Federal Reserve officials who are projected to raise interest rates in December. While the picture isn’t all rosy ahead of next week’s election -- Republican presidential nominee Donald Trump’s campaign highlighted the number of people in their prime working years without jobs -- companies are increasingly resorting to higher pay to attract and retain workers.
“We’re gaining traction on wages,” said Drew Matus, deputy U.S. chief economist at UBS Securities LLC in New York. “It is a solid report that suggests slack has eroded to a point where the Fed has to seriously consider how far they want to let wages accelerate.”
The pace of wage gains exceeded the 2.6 percent median estimate of economists surveyed by Bloomberg. The unemployment rate fell to 4.9 percent from 5 percent. Employers boosted payrolls by 161,000 people in October, close to the 173,000 median projection, and revisions added 44,000 jobs to previously reported gains in the prior two months.
Atlanta Fed President Dennis Lockhart said on Friday: “I consider that a quite satisfactory jobs report.”
Fed Chair Janet Yellen said in September that while there has been “some modest pickup” in pay gains, “my hope and expectation is that we will see some further pickup in wage growth, and that it will be broadly beneficial to American households.”
The larger-than-expected wage increase in October was helped by a 2 percent jump from September in hourly pay of utility workers, who scrambled to get power and telecommunications restored after Hurricane Matthew struck the southeastern U.S. The gain was the largest since November 2012, when there was a 2.5 percent surge in the aftermath of Hurricane Sandy -- a gain that partially reversed the following month.
Other gauges show pay gains rising. The Atlanta Fed’s Wage Growth Tracker indicates median pay rising an average 3.6 percent over the past three months, matching the fastest rate since January 2009. The Labor Department’s Employment Cost Index was up 2.3 percent in the third quarter from a year earlier, matching the second-fastest pace of this expansion.
Trump says the economy can do better and plans to overhaul tax, trade, energy and regulatory policies that he says will break down barriers to faster growth. Democratic nominee Hillary Clinton has said she wants to boost the number of well-paying jobs and bring about full employment. Americans head to the polls on Nov. 8.
“If voters were only consulting what was actually happening to their wages and income, then yes, voters should be in a good mood, but a lot of people’s interpretation of the statistics is driven by what their political leaders tell them,” said Gary Burtless, a senior fellow at the Brookings Institution in Washington and former Labor Department economist.
Service producers led the increase in October employment, with health-care providers adding the most workers in three months. Construction companies tacked on 11,000 jobs after 23,000 in September for the biggest two-month advance since February and March.
Not everyone is necessarily sharing in the labor market’s gains. Some 5.89 million American employees were in part-time jobs but wanted full-time work, a statistic known as working part-time for economic reasons. That figure is little changed over the past year and above its level from before the recession began in late 2007.
Of those who wanted full-time work, 2.12 million said part-time employment was all they could find, the highest in seven months.
“If you peel the layers, the Fed would rather see fewer part-time workers for economic reasons” and more who actually desire such work, said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. “But overall with job growth, an upwards revision and big wage gains, it’s a pretty solid job report to start out a new quarter.”