U.S. Wages Record Biggest Drop in 8 Years Despite Job Growth

U.S. wages posted their biggest drop in at least eight years even as payrolls increased in December.

Average hourly earnings decreased by five cents or 0.2 percent, which almost nullified gains in November. The drop in earnings was the biggest on record dating back to 2006.

This outshone the rise in non-farm payrolls by 252,000 last month, after a revised increase of 353,000 in November as reported by the Labor department. December became the 11th consecutive month of payroll increases above 200,000, the longest stretch since 1994.

Construction and manufacturing employment increased by 48,000 and 17,000, respectively. Government employment rose by 12,000 positions.

Almost three million new jobs were created last year, the strongest since 1999.

The jobless rate also fell by 0.2 percentage point to 5.6 percent -- a six and a half year low -- but it was mainly due to a drop in labor participation.

Some economists wondered whether last month's broad-based fall, led by a 1.2-percent drop in the retail trade sector, was a seasonal fluke that would be revised away.

"There is no obvious fundamental economic factor that would contribute to today's number," Michael Feroli, an economist at JPMorgan in New York, was quoted by Reuters as saying. "We are disposed to view this decline as a one-off."

On the bright side, about 21 states are set to increase their minimum wage.

"The wage story should look much better at the end of 2015," said Dan Greenhaus, chief strategist at BTIG in New York.

Among the states that raised their minimum wage on the first day of this year are Alaska, Arkansas, Connecticut, Florida, Nebraska, Ohio, Maryland, Massachusetts, Rhode Island and South Dakota, a Fox News report read.

Increasing the federal wage, however, is still a subject of debate between the White House and the Republican-led Congress amid the issue on the gap between the poor and the wealthy.

The President's efforts to hike the federal wage to an hourly $10.10 has stalled in the Congress as Republicans now control the House and the Senate, and passage of a measure on the matter is now seen as unlikely.

About 3.3 million of the 75.9 million hourly-paid U.S. workers aged 16 and older had wages at or below the federal minimum.