NEW YORK (CNNMoney.com) -- The end of more than two years of job losses can't come soon enough for most Americans.
But with all the attention given to the number of jobs on U.S. payrolls and the unemployment rate, it's easy to miss one important sign of improvement in the job market: paychecks have started to get bigger.
Despite the millions of people who have lost jobs during the past year, there are signs that personal income is increasing. Even a small gain in income is significant. If consumers have more money in their pocket, that can help to boost consumer spending and create the demand that will prompt a resumption of hiring.
"At the end of the day, we need income so people can spend money," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "It is a sign that things are beginning to improve."
According to the government's monthly job report for February, average hourly earnings have risen by 1.9 percent over the past 12 months..
That's not the only evidence of a turnaround in pay.
An analysis of income and employment taxes withheld from more than 130 million U.S. workers by TrimTabs Investment Research found that total salaries and wages increased by 0.7% in February compared to a year ago. This is the first increase since 2008, and it represents $42 billion extra dollars in consumers' pockets compared to a year ago.
TrimTabs CEO Charles Biderman said he was surprised and encouraged by the increase in income, which occurred even as TrimTabs estimated there was another loss of 30,000 jobs in February, and total losses of 3.9 million jobs in the past year.
He said companies are adding hours back for workers who had been put on a part-time basis during the worst of the recession. He said there also was a much better environment than a year ago for year-end bonuses that were paid in February.
"As things stabilize, businesses are starting to spend a little more," Biderman said.
Sohn said strong gains in productivity are also allowing employers to pay their skilled workers more. Productivity rose at nearly a 7% rate in the fourth quarter, according to the government..
But Bob Brusca of FAO Economics cautions that Friday's employment report could show unduly bad numbers for both payrolls and hours due to the major snow storms that closed many businesses in the eastern United States during the week the Labor Department surveys employers.
He said bigger bonuses and slightly higher salaries can't by themselves make up for the spending power lost due to the massive job cuts of the past two years.
Kyle Bass is the founder and chief investment officer of Hayman Capital Management. More
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