Despite the disappointing headline Establishment Survey estimate, those inclined to believe the payroll report as an overall economic narrative had two fallback issues.

U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm. 

The first was the unemployment rate as it supposedly projected the economy at or tantalizingly close to full employment. The fact that even the mainstream conversation has turned more toward recession in 2016 than additional FOMC “rate hikes” makes that an almost impossible assertion right from the start. However, the view behind the unemployment rate leaves no doubt.

As to “surging wages”, that is likewise relatively easy to dismiss and on several fronts. First of all, as noted with the broad account of the CES, monthly variation is rather extreme so any one month of gains should be taken with full caution and skepticism. That is especially true of any purported wage gains in the month of January, particularly January 2016 as somewhat different than January’s past.

As the United States marks more than six years without an increase in the federal minimum wage of $7.25 an hour, 14 states and several cities are moving forward with their own increases, with most set to start taking effect on Friday.

California and Massachusetts are highest among the states, both increasing from $9 to $10 an hour, according to an analysis by the National Conference of State Legislatures…

With Friday’s increases, the new average minimum wage across the 14 affected states rises from $8.50 an hour to just over $9.

As was learned relatively quickly via WalMart’s experience with its wage hike, the more relevant factor to overall economic advance is not the wage rate but the net effect on total income. The true minimum wage is, after all, zero. In some places such as Oakland, individual municipality treatment of the wage mandate seems a likely factor in distributing these basic economics.

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