Marketplace - Wage growth disappoints

Episode Date: September 4, 2026

This economy added twice the amount of jobs expected in August, which is good news for the labor market. Still, the latest jobs report showed average hourly earnings were up just 3.1% annually — the slowest growth in more than five years. In this episode, when we can expect wages to start keeping up with inflation. Plus: American tourism to Europe is up, some farmers rely on decades-old machinery as budgets tighten, and one mom goes back to school 15 years after she started.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Jobs are steady. Prices are high. What will the Fed do?Wage growth can't compete with inflation right nowSqueezed by a tough economy, many farmers are relying on decades-old machineryMore American tourists are visiting EuropeThis mom of six is rewriting her career by going back to school

Well, that jobs number was a surprise. Now what? From American Public Media, this is Marketplace. In New York, I'm Kristen Schwab in for Kyrisdal. It's Friday, September 4th, and it's good to be here with you. The Fed has really just two jobs, maximum employment and stable prices. And according to the August jobs report we got today, the maximum employment part is going pretty well, like, better than expected. Here to talk about what that means for the Fed and the economy. We have Catherine Rampel at MS Now in the Bullwork and Courtney Brown from Axios. Hey, you two. Hey, Kristen. Hey, Kristen.

So the numbers are 162,000 jobs added, a steady unemployment rate of 4.1%. Courtney, what do you think of those numbers? Really great. I do have like a little bit of whiplash, though, because today's jobs were, was almost the mirror image of July when you consider the revisions underneath the hood. I felt like the July report headline number, la, not great. And then the revisions made the past look a little bit worse as well. And then today we get the jobs report, headline number super strong.

And then you look at the revisions and made the past look a little bit better. I mean, the number of jobs in July we thought that the economy shedded jobs, it turns out with the revisions, the economy actually. gained some jobs. So the summer slowdown that we thought, the summer slowdown was not as bad as we thought. And it looks like the labor market is set up for a decent fall, maybe, maybe, fingers crossed, that jobs growth continues the way that it looked to boom in August. Well, Catherine, what do you think the Fed thought of this? I mean, the 12 voting members have been pretty split lately. Do you think this, I don't know, cements their feelings, changes their

minds? The markets seem to think so. If you look at the market reaction to today's jobs report, markets seem to think that this has encouraged the Fed to raise rates at their coming meeting. That if the Fed was essentially worried about the stagflation quandary, the idea that they would have to face stagnation and inflation simultaneously, and those imply different courses of action for interest rates, maybe the stagnation problem is kind of off the table or it's at least less worrisome, as you just heard Courtney say, then jobs numbers were quite good. The inflation numbers still not terrific. And so that's not great, but at least it can kind of maybe focus the minds of the members of their FOMC so that they can raise interest rates. Now, there are going to be a lot

of complications with that, even if they think that's the right course of action for the economy, of course, not least because the guy in the White House has been pretty clear in tweeting all day that he does not want that to happen. Right, Catherine, well, we do get CPI and PPI next week. Do you think that that could change anything? If the numbers come in better than expected, if inflation does seem to be easing. And to be fair, we've gotten some better than expected numbers in the past. month or so on the inflation front, yeah, maybe that would change the course of action.

But if you listen to what Kevin Warsh, the Fed chair said in Jackson Hole, was it last week? I think it was last week. It certainly sounded like it would take quite a bit of relief on the inflation front to change the Fed's mind about what they needed to do, or at least how seriously they needed to take high price growth. Hmm. Courtney, I want to switch over to the bond market. Long-term bonds hit record highs again this week. Are you concerned? Yes and no. I feel like I've been living in this world where I have some people, including many people in the Trump administration, I spent some time with Treasury Secretary Scott Bess in Asheville at the G20 Finance Minister Track this week. And, you know, he seemed to think that this was happening for like okay reasons. Like, this is. This is a sign that, you know, investors are really confident about a strong economy in the future and the big AI bet that we can get, you know, non-inflationary growth. So that is their message.

And so when you hear that, you're like, okay, maybe. But on the other side, when you talk to some of the global finance ministers who were in Asheville this week, this is the global phenomenon, right? This is not just in the U.S. They're like, yeah, we think this is a message that, you know, we've not been. as fiscally responsible as we should have been. And maybe this is the bond market, you know, throwing up their hands and starting to get a little less willing to, you know, lend the government money at cheap rates. And that's obviously been a huge phenomenon mostly in the 2010s. And are the 2020 is going to be a story where bond market says no more. And so there's different stories happening

here. And if it's if it's the reason why some of the foreign finance ministers believe this is happening, that seems not great. If it's the reason why, you know, Secretary Scott Besson says, I mean, fine. I think the ultimate outcome is the same, right? I mean, it means higher borrowing costs for consumers, no matter the reason. So I think that is going to be something to watch. How much does this continue to weigh on a consumer we know struggling with affordability? Yeah, we're already seeing that a bit. Catherine, I'm wondering, you know, borrowing costs coming full circle here, talking about the bond market. Is there a way here where the bond market does some of the Fed's job?

Well, it is the case that when interest rates go up, whether they're at the short end of the curve or at the long end of the yield curve, that tightens financial conditions. So, yeah, for some sectors that are particularly sensitive to long-term rates, such as housing, because most Americans get a 30-year mortgage, if they get a mortgage, yeah, that'll probably squelch demand a little bit. Now, I'm not sure that making housing a little bit more expensive, which is effectively what would happen here, is really going to be welcomed by consumers, by voters. But there'll be some tightening. And look, if you listen to what Fed Chair Kevin Warsh has said in the past, he has basically said that he thinks that the Fed should shrink its balance sheet, which would also have the same effect as potentially raising rates at the long end of

the yield curve. So, yeah, to some extent, it will tighten financial conditions. Will that be sufficient? Probably not. And I think that's why, again, you see market expectations where they are, where they do think that the Fed is going to raise. the overnight rate, which is, you know, their main policy tool, their main monetary policy tool, their main tool that they have to raise rates and to just sort of tap on the brakes. Catherine Rampel is at MS now in the bulwark and Courtney Brown is at Axios. Thanks, you too, and have a good weekend. Have a good weekend.

Wall Street today, because of how markets work, good jobs numbers meant bad vibes for traders. We'll have the details when we do the numbers. Jobs report, with a lackluster footnote, a pretty important one, too. Average hourly earnings were up 3.1% year over year last month. That's the slowest pace in more than five years. And in the last six months, the slowdown has been particularly sharp. Meanwhile, during the same period, of course, prices have been spiking from everything, from gas to groceries.

Marketplace's Mitchell Hartman reports. As I was working on this story at the office this morning, I kept getting in a by workers from a local H-FAC firm, installing new cables and ductwork in the ceiling above my desk. So I figured I might as well ask, how's the job going compensation-wise? Kyle Wallace is a journeyman controls technician. I mean, trending in the last couple of years I've been getting consistent raises, but does it seem to really affect how much money that I'm able to spend? Because it's like, I make more and more every year, but everything else is more and more expensive.

Since spring, after the Iran war started, wages have been, losing ground to prices, says Kyle Moore at the Century Foundation. The American worker is working harder. Productivities up. Wage growth is tepid. Prices are continuing to rise. And why are wages so tepid? Well, first, there's the low-hire, low-fired job market. With workers hesitant to quit, says Bill Adams at Fifth Third Commercial Bank.

And one of the big drivers of workers getting higher wages is when they switch jobs to a higher-paying one. What would generate more wage growth? a job market with more competition among employers for workers. But right now, it's employers who have all the leverage. Frank Fiorelli at Small Business Payroll processor Paychecks has one idea why. Maybe the threat of AI is preventing people from asking for wage increases. So is there any light at the end of this wage growth tunnel? Fiorelli says weekly wages are rising for small business workers.

They're working more hours because their employers... are trying to squeeze out as much from the existing folks that they have. Sooner or later, that leads to more hiring. Add to that, today's Out of the Ballpark Jobs Report, and Fifth Third Bank's Bill Adams says we're likely to see more job creation and more demand for workers going forward. And so that means the job market is likely to tighten over the next 12 months, which he predicts will push wage growth higher again.

I'm Mitchell Hartman for Marketplace. Diesel prices hit an all-time high today, $5.85 a gallon. That's tough for a lot of industries, but especially tough for farmers who are also dealing with higher fertilizer costs and farming machinery prices that are reaching historic highs. So as Harvest Public Media's Emma George Griffin reports, farmers are trying to work with the equipment they've got. If you visit Kellogg Family Farms in central Michigan, you'll see hundreds of of acres of soybeans, century-old barns, and piles of old machinery. Some of the equipment will never use again. That's Dennis Kellogg, the sixth-generation owner of Kellogg Farms.

But it's amazing how if I need a part or something that's similar that'll work on even a different brand, I'm able to go and find something that'll work. Kellogg likes working on older equipment. He says it's easier and cheaper to repair machinery that's not computerized. But in recent years, it's become more of a necessity. More than likely, we'd update if we had the financial resource and the justification for it. We have a budget. We have to live with them. Kellogg and other farmers are coping with a tighter farm economy.

With trade uncertainty and rising costs, producers don't have much more to spend on machines that can cost upwards of $1 million. Farm equipment sales have declined by more than 20% this year, according to data from the Association of Equipment Manufacturers. Drew Kinsey is an agriculture research analyst at the University of Missouri. While he says more farmers are now relying on old equipment, it's been a trend for years. We go back 50-plus years ago. Then it was much more common for every farm up and down the road to have new equipment. He says until the late 90s, technological advancements made older machines obsolete. Now, Kinsey says, even decades-old machines have the bare-bones capabilities to get the job done.

Plus, he says new technology can even be installed in older equipment. It's really been pretty revolutionary in the last 20 years as far as, you know, enabling farms to have older equipment still be competitive with the latest and greatest. In Paducah, Kentucky, Donnie Edwards and his son have a repair shop on their 2,000-acre farm. That's especially handy since Edward says new equipment is just too costly right now. It's a tough pill to swallow. Well, you need to spend another $100,000 on computerized stuff for your combine, tractor, spray, everything it goes with it. But you're not going to make all that much more money.

Edward says he taught his son to repair equipment knowing it's becoming almost a survival skill in farming. But by foregoing new technology, farmers may be. lose out on efficiency. That's according to Doug Hauser, who specializes in digital agriculture at Iowa State University. He says farmers have to be extremely intentional when deciding what services and equipment are worth investing in. A lot of farmers right now are stepping back and trying to figure out their equipment plans, whether it's more maintenance or if it's time to trade into maybe not new paint, but maybe some used, updated equipment. There is no one-size-fits-all solution for farmers trying to cope with strained wallets.

Not every farmer is using decades-old machinery or has a repair shop, but many farmers are doing whatever they can to stay afloat until the farm economy improves. In Mount Pleasant, Michigan, I'm Emma George Griffin for Marketplace. Coming up. I'm getting older. I'm 34. And she said, and by the time you finish, you'll be 38 anyway. Listen, it's really never too late to start something new.

But first, let's do the numbers. The Dow Jones Industrial Average fell 271 points, half a percent, to finish at 53,414. The NASDAQ subtracted 77 points, 3 tenths percent to close at 26,506, and the S&P 500 lost 29 points, 4 tenths percent to end at 7718. For the week, the Dow gave up 3 tenths percent. The NASDAQ rose 4 tenths percent, and the S&P added a tenth of a percent. Lulu Lemon Athletica missed analyst sales expectations for the quarter. The company had been expecting sales to hold steady this year, but it now expects them to decline.

Lulu Lemon declined 17 and 4 tenths percent. Bonds fell. The yield on the 10-year T-note rose to 4.78%. You're listening to Marketplace. This is Marketplace. I'm Kristen Schwab. Over this Labor Day travel period, TSA expects to screen more than 17 million passengers. A lot of those people will probably be traveling within the U.S., but some will surely be flying abroad, maybe to Italy, Portugal, or Greece.

Americans made 6 million more trips to Europe in 2025 than in 2019, which means this isn't just some post-pandemic yolo thing anymore. For some people with the resources, international travel is now a way of light. Chelsea Delaney wrote about this in the Wall Street Journal, and she's here to talk about it. Thanks for coming on the show, Chelsea. Thanks so much for having me. So I want to start back in time with the days of Pan Am and how much flying has changed, definitely in terms of style, but also cost since then. Yeah, I mean, flying used to be an incredible luxury, only the wealthiest people did it. It was glamorous, you know, people dressed up.

They drink cocktails, they smoke cigarettes, and it was really something like. these elite jet setters. And, you know, in the 80s and 90s, we started to see deregulation of the airline industry. We saw these sort of global alliances among airlines. We saw more routes. And flying started to get a lot cheaper. And so that really opened the window for a lot more people to start traveling to Europe and around the world. It became something that middle class people could actually afford starting really in the 90s. Cigarettes on a plane is quite an image. I just not shake from my head. Tell me how much. It is. Tell me just how much international travel has exploded in recent years. I mean, it's huge now. So if we just look at, you know, Americans visiting Europe, it was 24 million trips to Europe last year. And, you know, travel has been getting, you know, cheaper. As, as we said, it's been getting easier to do with the surge and, you know, online booking platforms, Airbnb, things like that. And then we have the pandemic. shut people, shut international travel down, and then it came back in such a big way. So that's when we've seen this real explosion starting sort of in 2022, 2023. We've seen travel come back in such a big way. And what types of people are making up the majority of Americans traveling to Europe?

I think there are really two interesting groups of people traveling a lot more now. On the one hand, you have boomers who, you know, have gotten a lot wealthier. And then you also see a lot of young people who see travel as a necessity for them. So, you know, buying a house is out of reach for a lot of younger people. And so travel has kind of filled that void for a lot of people. You hear from people, this is their number one priority as being able to see the world and, you know, share it on Instagram and see where their friends are traveling. So I think that's also been a really important group. I mean, you talk to people who spend tens of thousands of dollars, hundreds of thousands of dollars a year traveling.

How do Americans travel differently from maybe local Europeans? Yeah, you talk to a lot of people in the tourism industry about this. And they love Americans. They love to see American tourists, even though they're, you know, they're all of these black backlash to the number of tourists in a lot of places like Barcelona. And they talked to this man who worked at a boat company in Greece. And he said, you know, Europeans, they come and they just buy an ice cream and they sit on a beach. But Americans, they come and they spend money. They go on trips. They stay for several days. And in Spain, Americans spent $350 a day last year. And it's compared to about $200 for Germans and

$150 for French travelers. So you hear this a lot from workers in the industry as well, Americans still tip, which a lot of Europeans don't. So I think that that does sort of help their reputation. What do you think our appetite for travel says about how the American economy is changing? Yeah, it's an interesting question. I think there's been this whole trend in the American economy over the past couple of years of people really prioritizing experiences, the experience economy. I think it in part fits in with this theme we're seeing just more broadly of people wanting to spend more money on experiences that they think are unique or teaches them something that makes them feel connected to a different type of community. So I think in some ways the way people travel is starting to change. It's not just get on a tour bus and see 70 sites in five days.

They want to have unique experiences that connect them with these local communities. I mean, you're an American based in London, right? Yeah, I am. How do you see the balance of Americans spending more? But as you touched on, you know, locals, protesting, even travelers. Where's the balance there? And how do you kind of look at it as an American abroad? Yeah, I think a lot of these European tourist destinations are trying to find the balance.

There has been a lot of backlash, a lot of protest building over the past couple of years, people in these cities feel pushed out. They think it's getting too expensive. They can't find housing. When I talk to people in the tourism industry in Europe, they say the strategy that we want is fewer tourists, but wealthier tourists. And that's kind of where Americans fit into this. So I think they're trying to find a balance. And in some ways, Americans help them find that balance because they are such high-value tourists. Chelsea Delaney covers European economics at the Wall Street Journal. Chelsea, thanks so much. Thanks so much for having me.

On Jobs Report Day, we tend to focus on the numbers about people in the labor force. But there are plenty of others who aren't technically a part of it and still perform plenty of labor. We're talking about unpaid caretakers and stay-at-home parents. The Bureau of Labor Statistics calls this category, quote, not in the labor force. And the group also includes retirees and students. Here's the next installment. of our series clocked out. My name is Elaine Bradley.

I am a wife, mom of six, and a non-traditional student. And I am located in Raleigh, North Carolina. I was originally a freshman at Morgan State University at 18 years old. Something happened with my financial aid. So I ended up having to drop out after my freshman year. From there, I guess went into the workforce. I went into corporate. I worked in the financial industry. I worked in the banking industry, the sales industry, and I focused on building a family and being a mom.

In January of 2024, I did have my fifth child, Sakani. And during that moment, I remember telling my friend Abigail that I thought about going back to school, but it was something that I had really set my efforts on. And I kept making the excuse that, okay, I have another baby. I don't have that much time. And she said, hey, you need to go back to school. You need to go finish up your degree. And you need to apply to law school.

And I said, I'm getting older. I'm 34. And she said, and by the time you finish, you'll be 38 anyway. I started off with two classes at first fall semester. And then spring semester, I started with three classes per term. It's not possible for me to work a 9 to 5 and go to school full time and be a full-time parent, full-time wife. So I take different projects and opportunities

to where I can invest in things that are going to help my career long-term. As a mom, you do things for your kids. You want to be an example to them. And that's how it started, like, you know, if I do this, my kids are going to be so proud of me. They're going to be bragging on me. They're going to be like, my mom is really that girl.

She went and went back and got her degree. But then the goal shifted to me. where I'm really doing this for myself. I'm making that 19-year-old Lane who felt as though like this is the only option I have. I'm now showing her you have plenty of options. There's so many things that you can do now and making her proud.

Hopefully I will be starting fall 2028 for law school. That was Lane Bradley, working on her bachelor's degree in Raleigh, North Carolina. you can hear more stories from this series and tell us about your own experience stepping back from work at marketplace.org slash clocked out. This final note on the way out today, here's one that got buried a bit this week. We got new trade numbers from July, and here they are. The U.S. trade deficit grew to its biggest gap in 16 months, up more than 24 percent from June to July.

shipments of computers, computer accessories, and semiconductors surged. Some experts argue tariffs don't really do a good job of actually reducing the trade deficit. Others say, whether they do or not, data center construction will outweigh it all. Our theme music was composed by B.J. Learman. Marketplace's executive producer is Nancy Fargolly. Joanne Griffith is the chief content officer, Neil Scarborough, is the vice president and general manager. And I'm Kristen Schwab. Have a great holiday weekend.

We'll be back here on Monday. This is APM.