October jobs report shows wage lag

The U.S. economy created 165,000 new jobs in October, according to data released by the Labor Department on Friday. The unemployment rate fell to 4.1%, down from 4.2% in September.

Employers in health care, manufacturing, and business services drove the hiring growth. Restaurants and construction firms reduced their staff during the same period. The government also revised employment figures for August and September upward by a combined 84,000 jobs.

Average wages in October increased by 3.1% compared to the same month last year. While that figure marked a slight increase from the previous month, it trailed the pace of rising consumer prices. Inflation reached 3.7% in September, driven largely by higher energy costs following the war with Iran. This gap between wage growth and price increases has persisted for much of the year.

Cory Stahle, an economist for the job search site Indeed, noted that workers are currently losing ground financially. He stated that the longer this situation continues, the more impact it will have on households. Voter frustration over these high prices played a major role in the recent midterm elections, where Republicans lost their majorities in both the House and Senate.

The Federal Reserve held its benchmark interest rate steady at its meeting last week. With unemployment remaining historically low, the central bank has prioritized fighting inflation. Investors anticipate the Fed will raise rates when policymakers convene in December.