Rising wages in the USA are moving from a market mechanism created by job changes to a stage requiring the leverage of strikes.

US employment statistics (August) confirm the easing of supply and demand in the labor market. The unemployment rate is 3.8%, higher than the previous month (3.5%), but within the range of 3.4-3.8% since dropping below 4% in 2022. It was 3.7% a year ago. The number of non-agricultural sector employees is 0.187 million, also a modest figure. In terms of the labor force of 167 million people, it is not dramatic. Average hourly wages increased by 4.3% and average weekly wages increased by 4%, as expected.

The changes occurred in the labor participation rate and the number of unemployed. The labor participation rate is 62.8%, higher and statistically significant compared to the previous month (62.6%) and a year ago (62.3%). It is possible that students who have finished the suspension of student loan payments have started working to fill the gap left by early retirement of the elderly. The number of unemployed is 6.35 million, higher than both the previous month (5.84 million) and a year ago (6.02 million). The clear increase in the number of unemployed to over 6 million is evidence of a labor supply-demand easing.

These numbers are important to compare with the job openings and labor turnover survey (JOLTS) conducted by the leading indicator, the Bureau of Labor Statistics. The job openings in July decreased by 0.5 million from the previous month to 8.82 million. If the job openings decrease continues at the same pace, it would indicate a nearing micro-level labor supply-demand balance. According to the wage growth tracker of the Atlanta Federal Reserve (July), the wage growth rate difference between job switchers and stayers is now 1%, significantly lower than the peak of 2.8% in August last year.

Considering the recent frequent strikes, it is certain that the wage increase in the United States has reached a stage where it cannot be sustained without a boost from strikes, transitioning from market-driven mechanisms based on job changes. The wage growth has transitioned to a stage where it requires intervention from strikes to maintain the increase.