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'Most of the job growth is happening with people over age 55': Economist

A growing, older-age working class population could be one factor keeping wage gains among non-supervisory employees from accelerating further, according to at least one economist.

The Department of Labor released its January jobs report Friday morning, showing better than expected gains in non-farm payrolls, and an unemployment rate just a tick above a 50-year low.

Wage growth accelerated relative to December, but at 3.1% year-on-year growth, remained below its recent peak from last February. And average hourly earnings for private-sector production and non-supervisory employees were virtually unchanged between December and January, even in an increasingly tight labor market.

The sluggish wage growth for that segment of workers could be explained by the shifting composition of the workforce, labor economist Teresa Ghilarducci told Yahoo Finance’s On the Move.

“I’m looking deeper into the [Department of Labor’s] report, and I’m finding most of the job growth is happening with people over 55,” she said. “And most of that job growth is in home health-care, personal health-care and in janitorial services.”

As Ghilarducci noted, working-age population growth did skew toward the older end of the spectrum in the household survey of the January jobs report, which breaks down employment trends by demographics including age. According to this survey, the number of workers 55 and over rose by 2.6% year over year in January, seasonally adjusted. The second largest jump was among workers aged 20-24, with the number of workers rising by 1.9%.

“It might be the bargaining power of older people is just not pushing up wages,” Ghilarducci said.

Most of January's job gains over last year came from workers 55 and over.

Another explanation for why wage gains among non-supervisory employees has been lackluster is that workers at the very lowest end of the pay scale have seen their earnings rise by way of new minimum wage requirements, rather than through independent decisions by their employers, Ghilarducci said.

“We heard the president at the State of the Union Address talk about the very lowest workers getting big wage increases,” Ghilarducci said. “And then we see today’s report and that’s not showing up. Where that can be reconciled by one simple, really simple fact: The very bottom has been getting increases for minimum wage increases, not from the market.”

Minimum wage increases

Starting January 1, 2020, minimum wage increases in more than 20 states and 26 cities and counties in the U.S. took effect. Seventeen of these states and municipalities brought the wages floor up to at least $15 per hour. That’s double the federal minimum wage, which has been at $7.25 per hour since 2009.

“But there are only several million people at or near the minimum wage,” Ghilarducci said. “We’re talking about 100 million people who are in the bottom tier of the labor force who haven’t gotten a raise. So the minimum wage boosts up the very bottom, but that doesn’t trickle very far up. So overall, we’re seeing most of the population not getting the wage increases that the very top are getting.”

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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