Slower January wage growth is a big reason Wall Street believes the Federal Reserve will not feel pressed to raise interest rates next month. Bankers who want a deeper explanation may look no further than their own paychecks.
In January, the financial services sector showed a steep year-over-year decline in average hourly wages, even as it added 32,000 employees, and economist Diane Swonk says the difference-maker there was a drop in annual bonuses for 2016.
"Financial services was a driving factor of employment gains, and here's one of the areas where employment gains came in, and we lost 34 cents an hour. That's stunning," said Swonk, CEO of DS Economics. Swonk's firm dug into why the overall average hourly wages were up only 0.1 percent in January and found from the Bureau of Labor Statistics that a lack of bonuses was a big factor in the wage decline.