Tag Archives: wages

A decade after recession, a jump in U.S. states with wage gains for American workers

Newly hired employees take a break from training to pose for a group photo at the chain’s soon-to-open 54th outlet in Oakland, California ,U.S., January 24, 2018.

By Ann Saphir, Jonathan Spicer and Howard Schneider

OAKLAND, Calif./CANTON, N.Y./WASHINGTON (Reuters) – The kind of pay raises for which American workers have waited years are now here for a broadening swath of the country, according to a Reuters analysis of state-by-state data that suggests falling unemployment has finally begun boosting wages.

Average pay rose by more than 3 percent in at least half of U.S. states last year, up sharply from previous years. The data also shows a jump in 2017 in the number of states where the jobless rate zeroed in on record lows, 10 years after the financial crisis knocked the economy into a historic recession.

The state-level data could signal an inflection point muffled by national statistics.

Over the past four years, the U.S. economy added 10 million jobs and the overall unemployment rate fell to its lowest level since 2000. Yet wages have disappointed.

The disconnect has puzzled economists at the Federal Reserve, frustrated politicians concerned about rising inequality, and held regular Americans back, even as businesses have benefited and stock markets have surged, particularly in the first year of U.S. President Donald Trump’s presidency.

Trump says his tax cuts and regulation rollbacks are lifting business sentiment, and in an upbeat address to Congress on Tuesday, he said Americans “are finally seeing rising wages” after “years and years” of stagnation.

Indeed, average hourly earnings were up 2.9 percent in January year-on-year, the biggest rise in more than 8-1/2 years but still less than the 3.5 percent to 4 percent economists say would be a sign of a healthy economy.

The Reuters analysis and interviews with businesses across the country do show wage increases in industries ranging from manufacturing to technology and retail. Executives are mixed, however, on how much to credit Trump after several years of job growth that has chopped nearly six percentage points from the unemployment rate since its peak of 10 percent at the height of the 2007-2009 recession.

“Everyone in the building knows that they can leave and make more money,” said Michael Frazer, president of Frazer Computing, which provides software to U.S. used-car dealers from its offices in northern New York state. In response he raised wages by 6.1 percent at the end of 2017, up from 3.7 percent the previous year.

In Portland, Oregon, software provider Zapproved now hires coding school graduates and spends up to three months training them because the experienced software developers it used to hire have become too expensive. And still, CEO Monica Enand says she gives her developers twice-yearly raises “to make sure we are in the market for pay.”

JOBLESS RATES AT RECORD LOWS

The Reuters analysis of the most recent data available found that in half of the 50 states, average hourly pay rose by more than 3 percent last year. That’s up from 17 states in 2016, 12 in 2015, and 3 in 2014. Average weekly pay rose in 30 states, also up sharply from prior years, the analysis showed.

Unemployment rates are near or at record lows in 17 states, including New York, up from just five in 2016, the Reuters analysis shows.

“Wage growth tends to accelerate when the unemployment rate gets really strong,” said Bart Hobijn, an economics professor at Arizona State University.

California, Arkansas, and Oregon were among those both notching 3-percent-plus wage gains and plumbing record-low unemployment rates. This broadening of benefits to U.S. workers comes as robust global growth pushes up wages from Germany to Japan.

New York Fed President William Dudley said last month that firmer wage gains in states with lower unemployment rates gave him confidence that U.S. inflation, long stubbornly low, would soon rise.

In California, home of Noah’s New York Bagels, more than half of its 53 stores now pay their new hires more than the legal minimum wage, twice as many as in mid-2017.

“It’s very challenging to find enough people” in low-unemployment areas like the San Francisco Bay Area, said Noah’s president Tyler Ricks, who expects to hike pay further this year even as he opens five new stores.

To be sure, some states like Idaho with very low unemployment continue to have slow wage growth, while some like Delaware with very strong wage growth still have jobless rates well above their record lows.

And the share of gross domestic product that feeds back to labor as compensation has only edged slightly higher this decade, after generally declining since the 1970s, suggesting workers have a long way to make up ground.

Yet the state-level data hints at a first step.

Galley Support, a Sherwood, Arkansas-based manufacturer of latches for airplane kitchens and toilets, gave unskilled workers as much as a 20 percent pay hike last year. CEO Gina Radke said it will sap profit but with the Trump administration’s business-friendly policies set to benefit aircraft companies like Boeing, she added, “We feel confident that we will see an increase in sales to cover the increase in wages.”

Work-site managers at Gray, a company that oversees the building of factories and other projects from its headquarters in Lexington, Kentucky, also got a 20 percent raise since 2016. Yet a paycheck of up to $200,000 a year, plus bonuses, often isn’t enough to fill all the jobs on offer.

“There is just so much work around for people that it’s just hard to lure them away,” said Susan Brewer, Gray’s vice president of human resources.

(Reporting by Ann Saphir in Oakland, Calif., Jonathan Spicer in Canton, New York and Howard Schneider in Washington; Editing by Andrea Ricci)

U.S. job growth cools as labor market nears full employment; wages rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

Nonfarm payrolls increased by 148,000 jobs last month after surging by 252,000 in November, the Labor Department said on Friday. Retail payrolls decreased by 20,300 in December, the largest drop since March, despite reports of a strong holiday shopping season.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

“We do not think that today’s employment report will keep the Federal Reserve from tightening again at the March policy meeting, given other strong recent economic data,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.

Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.

Prices of U.S. Treasuries were mostly flat while the U.S. dollar <.DXY> was slightly stronger against a basket of currencies. U.S. stock indexes opened at fresh record highs.

Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.

“With the tax cuts we get solid GDP growth in the near-term and then a fiscal hangover, which will likely put the economy at a greater risk of recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

NEAR FULL EMPLOYMENT

Data ranging from housing to manufacturing and consumer spending have suggested solid economic growth in the fourth quarter, despite a widening of the trade deficit in both October and November, which could subtract from gross domestic product.

In a separate report on Friday, the Commerce Department said the trade gap widened 3.2 percent in November to $50.5 billion, the highest level since January 2012.

The deficit was boosted by record high imports, which offset the highest exports in three years. The economy grew at a 3.2 percent annualized rate in the third quarter.

For all of 2017, the economy created 2.1 million jobs, below the 2.2 million added in 2016. Economists expect job growth to slow further this year as the labor market hits full employment, which will likely boost wage growth as employers compete for workers.

Economists are optimistic that annual wage growth will top 3.0 percent by the end of this year. The December employment report incorporated annual revisions to the seasonally adjusted household survey data going back five years.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point last year.

Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.

“If the unemployment rate declines and wages rise faster, which is likely, the Fed is going to start worrying about wage inflation,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employment gains were largely broad-based in December. Construction payrolls increased by 30,000 jobs, the most since February, reflecting recent strong increases in homebuilding. Manufacturing employment increased by 25,000 jobs.

Manufacturing is being supported by a strengthening global economy and a weakening dollar. Employment in the utilities sector fell for a second straight month.

General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs.

For all of 2017, retail employment dropped by 67,000 jobs after rising by 203,000 in 2016. Further job losses are likely this year as major retailers, facing stiff competition from online sellers like Amazon.com Inc <AMZN.O>, close stores.

Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores. Macys Inc also announced 11 store closures, which could leave 5,000 workers unemployed.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Strong U.S. jobs report bolsters case for further Fed tightening

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers hired more workers than expected in July and raised their wages, signs of labor market tightness that likely clears the way for the Federal Reserve to announce a plan to start shrinking its massive bond portfolio.

The Labor Department said on Friday that nonfarm payrolls increased by 209,000 jobs last month amid broad-based gains. June’s employment gain was revised up to 231,000 from the previously reported 222,000.

Average hourly earnings increased nine cents, or 0.3 percent, in July after rising 0.2 percent in June. That was the biggest rise in five months. On a year-on-year basis, wages increased 2.5 percent for the fourth straight month.

“The Fed set a low bar for balance sheet normalization to begin in September, and today’s number cleared that bar with elan,” said Michael Feroli, economist at JPMorgan in New York.

Although the economy is near full employment, wage growth has not been strong in part because many of the jobs being created are in low-wage industries. Last month, restaurants and bars added 53,100 jobs.

July’s monthly increase in earnings could, however, offer Fed policymakers some assurance that inflation will gradually rise to the U.S. central bank’s 2 percent target.

Economists expect the Fed will announce a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its next policy meeting in September. The Fed bought these securities to lower interest rates in the wake of the 2007-2009 financial crisis.

Sluggish wage growth and the accompanying benign inflation, however, suggest the Fed will delay raising interest rates again until December. It has increased borrowing costs twice this year and its benchmark overnight interest rate is in a range of 1 percent to 1.25 percent.

The dollar rose and was set for its biggest one-day gain versus a basket of currencies this year, while prices for U.S. Treasuries fell. Stocks on Wall Street edged higher. [.N]Economists had forecast payrolls increasing by 183,000 jobs and wages rising 0.3 percent in July.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, cheered Friday’s employment data. “Excellent Jobs Numbers just released – and I have only just begun,” Trump said on Twitter. “Many job stifling regulations continue to fall. Movement back to USA!”

Trump has pledged to sharply boost economic growth and further strengthen the labor market by slashing taxes, cutting regulation and boosting infrastructure spending.

But after six months in office the Trump administration has failed to pass any economic legislation and has yet to articulate a plan for much of its economic agenda.

 

UNEMPLOYMENT RATE FALLS

Wage growth is crucial to sustaining the U.S. economic expansion after output increased at a 2.6 percent annual rate in the second quarter, an acceleration from the January-March period’s pedestrian 1.2 percent pace.

The economy also got a boost from another report on Friday showing a sharp drop in the trade deficit in June.

The unemployment rate dropped one-tenth of a percentage point to 4.3 percent in July, matching a 16-year low touched in May. It has declined five-tenths of a percentage point this year and is now at the most recent Fed median forecast for 2017.

“Stable year-on-year wage growth should decrease the perceived risk of further slowing in wages and prices,” said Andrew Hollenhorst, an economist at Citigroup in New York.

“Strong payroll gains that place downward pressure on the post-crisis low unemployment rate will keep the center of the Fed comfortable with increasing policy rates in December.”

July’s decline in the jobless rate came even as more people entered the labor force, underscoring job market strength.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose one-tenth of a percentage point to 62.9 percent. The share of the population that is employed climbed to 60.2 percent, matching an eight-year high touched in April.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part time because they cannot find full-time employment, was unchanged at 8.6 percent last month. This alternative gauge of unemployment hit a 9-1/2-year low in May.

Monthly job growth this year has averaged 184,000, close to the 2016 average of 186,000. The economy needs to create 75,000 to 100,000 jobs per month just to keep up with growth in the working-age population.

Manufacturing payrolls advanced by 16,000 jobs in July, the largest gain since February. Employment in the automobile sector rose by 1,600 despite slowing sales and bloated inventories that have forced manufacturers to cut back on production.

U.S. auto sales fell 6.1 percent in July from a year ago to a seasonally adjusted rate of 16.73 million units. General Motors Co and Ford Motor Co have both said they will cut production in the second half of the year.

Construction payrolls rose 6,000 last month as hiring at homebuilding sites increased 5,100. The professional and business services sector added 49,000 workers last month.

Retail employment rose by 900 as hiring at motor vehicle and parts dealerships as well as online retailers offset a drop of 10,000 in employment at clothing stores.

Companies like major online retailer Amazon are creating jobs at warehouses and distribution centers. Amazon this week held a series of job fairs to hire about 50,000 workers. Government payrolls rose by 4,000 in July.

(Reporting by Lucia Mutikani; Editing by James Dalgleish and Paul Simao)

 

U.S. payrolls increase more than expected, wages rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers hired more workers than expected in July and raised their wages, signs of labor market tightness that likely clears the way for the Federal Reserve to announce next month a plan to start shrinking its massive bond portfolio.

The Labor Department said that nonfarm payrolls increased by 209,000 jobs last month amid broad gains. June’s employment gain was revised up to 231,000 from the previously reported 222,000.

Average hourly earnings increased nine cents, or 0.3 percent, in July after rising 0.2 percent in June. That was the biggest increase in five months. Wages increased 2.5 percent in the 12 months to July, matching June’s gain.

Average hourly earnings have been trending lower since surging 2.8 percent in February. Lack of strong wage growth is surprising given that the economy is near full employment, but July’s monthly increase in earnings could offer some assurance to Fed officials that inflation will gradually rise to its 2 percent target.

Economists expect the Fed will announce a plan to start reducing its $4.5 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

Sluggish wage growth and the accompanying benign inflation, however, suggest the U.S. central bank will delay raising interest rates again until December. The Fed has raised rates twice this year, and its benchmark overnight lending rate now stands in a range of 1 percent to 1.25 percent.

Economists polled by Reuters had forecast payrolls increasing by 183,000 jobs in July and wages rising 0.3 percent.

Wage growth is crucial to sustaining the economic expansion after output increased at a 2.6 percent annual rate in the second quarter, an acceleration from the January-March period’s pedestrian 1.2 percent pace.

The unemployment rate dropped one-tenth of a percentage point to 4.3 percent, matching a 16-year low touched in May. It has declined four-tenths of a percentage point this year and matches the most recent Fed median forecast for 2017. July’s decline in the jobless rate came even as more people entered the labor force.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose one-tenth of a percentage point to 62.9 percent.

Still, some slack remains in the labor market, which is restraining wage growth. A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, was unchanged at 8.6 percent last month.

July’s employment gains exceed the monthly average of 184,000 for this year. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

Republican President Donald Trump, who inherited a strong job market from the Obama administration, has pledged to sharply boost economic growth and further strengthen the labor market by slashing taxes, cutting regulation and boosting infrastructure spending.

But after six months in office, the Trump administration has failed to pass any economic legislation and has yet to articulate plans for tax reform and infrastructure spending as well as most of its planned regulatory roll-backs.

The jobs composition in July mirrored June’s. Manufacturing payrolls increased by 16,000 jobs. Employment in the automobile sector rose by 1,600 despite slowing sales and bloated inventories that have forced manufacturers to cut back on production.

U.S. auto sales fell 6.1 percent in July from a year ago to a seasonally adjusted rate of 16.73 million units. General Motors Co and Ford Motor Co have both said they will cut production in the second half of the year.

Construction firms hired 6,000 workers last month. Retail payrolls increased by 900 in July as hiring by online retailers more than offset job losses at brick-and-mortar stores.

Companies like major online retailer Amazon are creating jobs at warehouses and distribution centers. Amazon this week held a series of job fairs to hire about 50,000 workers.

Government payrolls gained 4,000 in July.

(Reporting by Lucia Mutikani; Editing by James Dalgleish and Paul Simao)

U.S. job growth rises briskly, wages continue to climb

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo

WASHINGTON (Reuters) – U.S. job growth increased more than expected in February and wages rose steadily, which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth.

Nonfarm payrolls rose by 235,000 jobs last month as the construction sector recorded its largest gain in nearly 10 years due to unseasonably warm weather, the Labor Department said on Friday. The economy created 9,000 more jobs in December and January than previously reported.

Fed Chair Janet Yellen signaled last week that the U.S. central bank would likely hike rates at its March 14-15 policy meeting. Job gains averaged 209,000 per month over the past three months.

The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.

Last month’s brisk clip of hiring was accompanied by steady wage growth, with average hourly earnings rising 6 cents, or 0.2 percent.

January’s wage growth was revised up to 0.2 percent from the previous 0.1 percent gain.

That lifted the year-on-year increase in wages to 2.8 percent from 2.6 percent in January.

The unemployment rate fell one-tenth of a percentage point to 4.7 percent, even as more people entered the labor market, encouraged by the hiring spree. Economists polled by Reuters had forecast employment increasing by 190,000 jobs last month.

With the labor market near full employment, wage growth could speed up as companies are forced to raise compensation to retain employees and attract skilled workers.

According to economists, wage growth of between 3 percent and 3.5 percent is needed to lift inflation to the Fed’s 2 percent target. But inflation is already firming, in part as commodity prices rise.

Rising inflation, together with a tighter labor market, stock market boom and strengthening global economy, has left some economists expecting that the Fed could increase rates much faster than is currently anticipated by financial markets.

The U.S. central bank lifted its benchmark overnight rate in December and has forecast three rate increases for 2017.

Job growth has averaged more than 186,000 per month since January 2010, a recovery that predates Donald Trump’s presidency. While Trump’s victory last November sparked a stock market rally and jumps in consumer and business confidence, there has been no surge in either business or consumer spending.

Data ranging from trade to consumer and business spending suggest the economy slowed further early in the first quarter after growing at a 1.9 percent annualized rate in the final three months of 2016. The Atlanta Fed is forecasting gross

domestic product growing at a 1.2 percent rate this quarter.

All sectors of the economy, with the exception of retail and utilities, expanded payrolls in February. Manufacturing employment increased 28,000, the largest increase since August 2013, as rising oil prices fan demand for machinery.

Construction payrolls surged 58,000, the biggest gain since March 2007, boosted by warmer weather.

Retail sector employment fell 26,000 after a gain of 39,900 jobs in January. Retailers including J.C. Penney Co Inc <JCP.N> and Macy’s Inc <M.N> have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations.

Government payrolls increased by 8,000 jobs last month despite a freeze on the hiring of civilian federal government workers, which came into effect in January.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

New York City mayor says ‘affordability crisis’ threatens city

New York Mayor

By Hilary Russ

NEW YORK (Reuters) – New York City is threatened by an “affordability crisis” because rising housing prices have significantly outpaced wage growth, Mayor Bill de Blasio said on Monday.

De Blasio used his state of the city address to speak broadly about New Yorkers’ struggles to pay rent and make ends meet and discussed recent proposals, rather than lay out many new proposals.

De Blasio, a Democrat who took office in January 2014, is up for reelection in November.

Held at the historic Apollo Theater in Harlem, home to numerous American musical legends including Billie Holiday, the program featured at least 45 minutes of introductory remarks that were a mostly a love story to the city’s diversity.

“So many people in this city are afraid they cannot stay in the city that they love,” because of high costs, de Blasio said.

De Blasio cited a long list of what he considers some of his biggest accomplishments, including the implementation of neighborhood policing and the highest ever four-year high-school graduation rate of 72.6 percent in 2016.

He said residents would hear in coming weeks more details of forthcoming proposals about homelessness, opioid addiction and the creation of more higher paying jobs, which he called the “next frontline.”

He said the city would strive to create 100,000 more permanent good jobs that pay at least $50,000 a year.

Last week, de Blasio released information about other proposals that he touched on in his speech, including ways to help seniors and low-income people afford housing by adding new units and providing more rental assistance.

He said previously that he would seek to add 10,000 apartments for households earning less than $40,000 a year, half of which would be reserved for seniors, while another 500 would be for veterans.

De Blasio referenced another element of the plan announced last week to help more than 25,000 older residents with rent of up to $1,300 a month through the city’s “mansion tax,” which he has proposed before.

“You will hear people say it cannot be done,” de Blasio said of the tax. “They will say you cannot get it through Albany,” using the state capital to refer to the state government, whose approval would be required for the tax.

The mansion tax would bring in $336 million on the sale of homes over $2 million, he said.

“We’re not going to give tax breaks to people doing well,” de Blasio said. “We’re going to ask them to do more.”

(Reporting by Hilary Russ; Editing by Leslie Adler)

Unpaid state salaries deepen economic pain in Yemen’s war

public workers crowd post office to receive salaries

By Noah Browning

DUBAI (Reuters) – Already suffering grievously under nearly two years of civil war, many thousands of Yemeni state workers now face destitution as their salaries have gone largely unpaid for months.

The immediate reason is a decision by the internationally-recognized government to shift Yemen’s central bank out of Sanaa, the capital city controlled by the armed Houthi movement with which it is at war.

Underlying the bank’s move to Aden, the southern port where the government is based, is a struggle for legitimacy between the two sides. The result is to deepen economic hardship when four-fifths of Yemen’s 28 million people already need some form of humanitarian aid, according to U.N. estimates.

“I sold everything I have to cover the rent and the price of the children’s school and food. I have nothing left to sell,” said Ashraf Abdullah, 38, a government employee in Sanaa.

“Salaries have become a playing card in the war, and no one cares about the fate of the people who die of starvation every day,” the father of two told Reuters.

At least 10,000 people have been killed in the fighting while millions face poverty and starvation. Saudi Arabia intervened in March 2015 to back President Abd Rabbu Mansour Hadi after the Houthis, who are aligned to Riyadh’s regional rival Iran, pushed him out of Sanaa.

The administration in Aden says it had to move the bank in August because the Houthis had looted the funds to pay soldiers and fighters waging war against it – a charge the group denies.

It has promised to pay salaries to public servants even in the main population centers which are mostly in Houthi hands. Prime Minister Ahmed bin Dagher said it had sent off a payment on Wednesday but banking sources say this covers only December, and four months of wages remain unpaid for most employees.

The crisis has affected tens of thousands of employees in Sanaa alone, a source in the Civil Services ministry said.

It is unclear how many of the 250,000 employees registered nationwide before the Houthis seized Sanaa in 2014 have received incomplete salaries – as a large proportion in government-held areas have been paid.

Nor is the number of public workers appointed by the Houthis after their rise to power, estimated in the tens of thousands.

The government denies it is trying to undermine support for the Houthis – whom it calls “coup militia” – by impoverishing state workers living under their rule. Instead, it accuses the Houthis of obstructing the payments and insists they be the ones to disburse the funds.

“The coup militia … (is) refusing to hand over lists of employees’ salaries in institutions and government agencies in the capital Sanaa and the provinces they control,” government news agency SABA quoted an official as saying.

(For a graphic on battle for control in Yemen, click http://tmsnrt.rs/2jV4tDI)

NATIONAL AUTHORITY

While the Houthis still control the main towns and cities in the north and west, they have steadily lost ground to government troops backed up by thousands of Gulf Arab air strikes.

Still, the government struggles to extend its influence over the land it nominally rules. It also faces a southern secessionist movement, restive tribes and Islamic militants, while many services such as electricity and water are scarce.

In the struggle for legitimacy, both sides appear keen to deprive the other of any mantle of truly national authority which paying salaries across the battle lines would confer.

Current and retired soldiers demanding their dues have even regularly demonstrated in Aden’s streets in recent days, suggesting the non-payments may not be strictly political.

Diplomats and analysts worry about the consequences of transferring the bank away from its veteran staff in Sanaa.

“The new central bank in Aden remains unequipped – on the basis of manpower alone – to handle the duties that its predecessor institution did,” said Adam Baron, a Yemen expert at the European Council on Foreign Relations.

The new bank denies this and says it is committed to working impartially and overcoming wartime confusion to do its job.

Meanwhile, many Yemenis can no longer wait for a solution.

“This is our fifth month without a salary, and we live by borrowing from the corner store, but now they are refusing to give us anything are calling in their debt, said Abdullah Ahmed, 50, a soldier in the interior ministry. “The landlord is demanding rent for the apartment … we’re dying, not living. Every door is being closed in our faces.”

(Editing by Tom Finn and David Stamp)

Job growth slows, but wages rebound strongly

People wait in line for job fair

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment increased less than expected in December but a rebound in wages pointed to sustained labor market momentum that sets up the economy for stronger growth and further interest rate increases from the Federal Reserve this year.

Nonfarm payrolls increased by 156,000 jobs last month, the Labor Department said on Friday. The gains, however, are more than sufficient to absorb new entrants into the labor market.

Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the work-age population. Employers hired 19,000 more workers than previously reported in October and November.

“Job creation and overall labor market conditions remain solid. With the potential for stronger fiscal stimulus in the form of infrastructure spending and tax cuts, job creation appears likely to remain on a solid footing in 2017,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors in Kalamazoo, Michigan.

The economy created 2.16 million jobs in 2016. Average hourly earnings increased 10 cents or 0.4 percent in December after slipping 0.1 percent in November. That pushed the year-on-year increase in earnings to 2.9 percent, the largest gain since June 2009, from 2.5 percent in November.

While the unemployment rate ticked up to 4.7 percent from a nine-year low of 4.6 percent in November that was because more people entered the labor force, a sign of confidence in the labor market.

The employment report added to data ranging from housing to manufacturing and auto sales in suggesting that President-elect Donald Trump is inheriting a strong economy from the Obama administration. The labor market momentum is likely to be sustained amid rising business and consumer confidence.

Trump, who takes over from President Barack Obama on Jan. 20, has pledged to increase spending on the country’s aging infrastructure, cut taxes and relax regulations. These measures are expected to boost growth this year.

But the proposed expansionary fiscal policy stance could increase the budget deficit. That, together with faster economic growth and a labor market that is expected to hit full employment this year could raise concerns about the Fed falling behind the curve on interest rate increases.

The U.S. central bank raised its benchmark overnight interest rate last month by 25 basis points to a range of 0.50 percent to 0.75 percent. The Fed forecast three rate hikes this year.

The dollar rose against a basket of currencies on the employment data, while U.S. government bonds were trading lower. U.S. stock index futures rose.

FACTORY JOBS RISE

Economists had forecast payrolls rising by 178,000 jobs last month and the unemployment rate ticking up one tenth of a percentage point to 4.7 percent.

A broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell one-tenth to a more than 8-1/2-year low of 9.2 percent.

Employment growth in 2016 averaged 180,000 jobs per month, down from an average gain of 229,000 per month in 2015. The slowdown in job growth is consistent with a labor market that is near full employment.

There has been an increase in employers saying they cannot fill vacant positions because they cannot find qualified workers. The skills shortage has been prominent in the construction industry.

Even as the labor market tightens, there still remains some slack. The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose one-tenth of percentage point to 62.7 percent in December.

The participation rate remains near multi-decade lows. Some of the decline reflects demographic changes.

December’s job gains were broad, with manufacturing payrolls rising 17,000 after declining for four straight months. Construction payrolls fell 3,000 in December after three consecutive months of increases.

Retail sector employment rose 6,300 after increasing 19,500 in November. Department store giants Macy’s <M.N> and Kohl’s Corp <KSS.N> this week reported a drop in holiday sales. Macy’s said it planned to cut 10,000 jobs beginning this year.

Department stores have suffered from stiff competition from online rivals including Amazon.com <AMZN.O>. Temporary help declined 15,500 last month, the biggest drop since January.

Education and health services employment rose 70,000, the biggest increase since February. Government employment increased 12,000 in December.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

2nd day of protest at McDonald’s shareholders meeting

Protesters set up tents on the street as they demonstrate outside the McDonald's headquarters calling for higher wages and improved working conditions in the Chicago suburb of

By Justin Madden

OAK BROOK, Ill. (Reuters) – Hundreds of protesters rallied outside McDonald’s Corp headquarters as shareholders on Thursday approved executive compensation and voted down a slate of shareholder resolutions, including those involving political contributions and antibiotic use in meat production.

The picketers are part of a national “Fight for $15” movement that, along with an improving job market, has spurred pay raises at major employers such as Wal-Mart Stores Inc and McDonald’s, though not to the level demanded by protesting workers and supporters.

McDonald’s, the world’s biggest fast-food chain, last summer increased average worker pay to almost $10 per hour. But those raises were limited to just a fraction of all McDonald’s restaurant workers in the United States because franchisees operate almost 90 percent of the chain’s 14,000 domestic locations.

Protesters called on Chief Executive Officer Steve Easterbrook, the architect of a turnaround plan that is gaining traction with help from a sales boost from all-day breakfast, to share the higher profits with all McDonald’s workers rather than just executives and shareholders.

Workers seeking pay of at least $15 per hour and the right to unionize, and their supporters, have protested at the company’s annual meeting for years. Their actions this week prompted McDonald’s to temporarily close its Oak Brook, Illinois, headquarters for the third year in a row.

“This comes down to holding McDonald’s accountable for keeping workers in poverty,” said Naquasia LeGrand, 24, who traveled 15 hours on a chartered bus from North Carolina, where she makes $8.15 an hour as a McDonald’s swing manager.

Angel Mitchell, a McDonald’s worker from Chicago, spent a rain-soaked night camping out at the company’s headquarters.

“We cook and serve those all-day breakfasts that are making McDonald’s millions and millions, but we can’t feed our own families without turning to food stamps,” Mitchell said.

McDonald’s says it cannot tell its franchisees how to pay their employees. The issue is the subject of a closely watched case before the National Labor Relations Board.

“At McDonald’s, we take seriously our role in helping strengthen communities,” providing many with their very first job, spokeswoman Lisa McComb said by email on Wednesday as protests kicked off.

The “Fight for $15” campaign is backed by the Service Employees International Union and also includes people who work in home care, child care, airports and higher education.

(Additional reporting by Lisa Baertlein in Los Angeles, Editing by Peter Henderson and Lisa Von Ahn)

U.S. extends overtime pay to 4.2 million salaried workers

Employees work at the checkout counters of a Walmart store in Secaucus, New Jersey, November 11, 2015.

By Daniel Wiessner

(Reuters) – The Obama administration on Tuesday unveiled the final version of a long-awaited and controversial rule to extend overtime pay to 4.2 million U.S. workers, which marks one of the administration’s most significant moves to address stagnant wages.

The rule, which has drawn intense criticism from business groups and Republicans, doubles the maximum annual income a salaried worker can earn and still be automatically eligible for overtime pay from $23,660 to $47,476 and requires that threshold to be updated every three years. It takes effect Dec. 1.

Officials said many workers will earn more money, an estimated total of $12 billion over the next decade, while others will work fewer hours for the same pay.

“More than 4 million workers are either going to be paid more or get time back to raise their family, go to school … or retrain to get a better job,” Vice President Joe Biden said during a phone call with reporters on Tuesday.

The rule will likely touch nearly every sector of the U.S. economy but is expected to have the greatest impact on nonprofit groups, retail companies, hotels and restaurants, which have many management workers whose salaries are below the new threshold.

Business groups, which lobbied heavily against the changes, say companies will be forced to cut wages and hours and may slow hiring.

The Obama administration and supporters of the new rule say the $23,660 threshold allowed companies to hold down labor costs by requiring workers with relatively low incomes to work well over 40 hours per week without additional pay.

The rule will likely face legal challenges, including claims that the U.S. Labor Department flouted legal requirements for creating new regulations. Republicans in Congress have said they will move to block the rule, but they would need to overcome a veto from President Barack Obama.

The new threshold was lower than the $50,440 standard proposed by the Obama administration last year, but the last-minute change to lower it, which was widely expected, did little to appease critics.

Any federal standard above the $35,100 overtime threshold in New York, which has a high cost of living, will inhibit economic growth in more rural states in the South and Midwest, Tammy McCutchen, a Washington D.C. lawyer who works with the U.S. Chamber of Commerce, said on Tuesday before the final rule was announced.

The threshold also disappointed proponents of the new rule, including Ross Eisenbrey of the left-leaning Economic Policy Institute, who first pitched an overhaul to the White House in 2013.

“It means a million fewer employees will be helped,” he said before the rule was released.

(Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Cynthia Osterman)