Positive performance of the Gross Domestic Product? Check. Unemployment rate still dropping? Check. Energy prices down from last year? Check. (Despite some recent price increases). So, why haven’t U.S. wages risen faster and higher than they have?
Are wages finally ready to have a meaningful uptick? According to Knowledge@Wharton:
“An early spring looks in store for workers with unexpected good news from the U.S. Labor Department: In January, unemployment clocked in at 5.7%, down from a post-financial crisis high of 10% in October 2009. Over the last three months, employers hired at the fastest pace since 1997. Another positive sign: After years of stagnant wage growth, average hourly earnings rose by 0.5%, the biggest gain in six years.”
“Though small, this uptick in wage growth raises the question of whether economic recovery might finally bring higher pay along with it. In February, Wal-Mart Stores announced a pay raise for its U.S. workers to $10 an hour, above the $7.25 an hour federal minimum wage, and other companies, such as Starbucks, Panera Bread, and Aetna have also raised wages at the lower rungs. That’s good news, when average real wage growth has hovered around zero among developed countries since the end of the financial crisis, according to a 2014 report by the Organisation for Economic Co-operation and Development, the International Labor Organization and the World Bank Group. G-20 countries overall have averaged only 1% to 2% real wage growth a year, most due to wage increases in China, according to the report.”
“Workers should remain skeptical of any dramatic change afoot on the wage front, however. The economic recovery taking hold at least in the U.S., if not in other major developed economies, may enable workers to claw back jobs, but dramatically higher pay is a much more tenuous prospect. The availability of still more U.S. workers on the sidelines ready for hire, along with an eager supply outside the U.S., continued displacement of workers via technology, and weaker worker protections in the law will allow employers to hold the upper hand for some time to come, experts say.”