On July 6, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2018 – which showed that total non-farm employment from the payroll survey rose by 213,000 and the unemployment rate rose by 0.2 per cent to 4 per cent in June 2018. The employment-population ratio was unchanged in June at 60.4 percent and has been largely stable since February 2018. The Labour Force Survey data, however, showed that employment only rose just 102 thousand in June 2018 and was accompanied by a substantial rise in the labour force (601 thousand) on the back of a surge in participation (up 0.2 points), which meant that total unemployment rise by 499 thousand. The broad labour underutilisation measure (U-6) also signalled weakness, rising by 0.2 points. There is still no evidence of a wages breakout going on although wages growth for blue-collar occupations has surpassed the white-collar occupations over the last 8 quarters. However, the data shows that real wages fell in June 2018 by 0.4 points. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.

Sunday (July 1, 2018) was a very sad day in Australia because it marked the second phase of the cuts to penalty rates for workers in the lowest paid sectors of the Economy. The Fair Work Commission (FWC), which is the quasi-judicial tribunal that sets wages in Australia including legally binding minimum wages and conditions, bowed to the relentless pressure from employers (and the conservative federal government) and decided to cut penalty rates for some of the lowest-paid workers in Australia. The cuts which will eventually savage take-home pay for these workers were phased in from July 1, 2017 with the final cuts coming in 2020. The phasing in process where saw Sunday wages will fall from 200 per cent to 150 per cent over that period was justified by the FWC because the cuts would be extremely damaging to the prosperity of the low-paid workers impacted. Anyway, we have just passed the first year of the cuts and this week marks the second phase. Given we received the latest employment by industry data in the last fortnight, we can undertake some detailed analysis to see whether there is any evidence to support the employers’ claims that the cuts would benefit jobs and hours of work in the impacted sectors (Retail Trade and Accommodation and Food Services). You will not be surprised to read that the opposite seems to be the case, although the generally poor results for the industries that are sensitive to the penalty rate cuts cannot be attributed directly to those cuts. But the evidence is very strong – the cuts to penalty rates have hurt low paid workers and driven then towards or over the poverty line with no positive effects being evident in terms of employment or working hour gains.