The US economy is growing at its fastest pace in four years. Unemployment recently sank to an 18-year low. That's all led President Donald Trump to deem America as "the economic envy of the entire world." But, you wouldn't know that by looking at your pay stub. Wage growth has been "sluggish," as Business Insider's Rich Feloni recently reported. Even our nation's top economists are baffled. Such low unemployment should mean that employers are kicking up pay in order to lure in workers. Yet, they're not. There's no single reason for why wage growth has been dismal. Business Insider spoke to three economists to shed light on their theories on the conundrum: Jake Rosenfeld of the University of Washington in St. Louis, Economic Policy Institute senior economist Heidi Shierholz, and Brookings Institution senior fellow Jay Shambaugh.
https://www.businessinsider.com/why-wage-growth-is-slow-2018-9 |
This article talks about how we had slow growing over the years and it gives us examples as to why we were having these issues. There are plenty of places that are hiring and in need of employees. As stated in the article, the economy is at the fastest growing pace in the last four years. I feel that the people of the US are just lazy because there are clearly jobs out there that are in desperate need of employees. My question is why are the people being lazy? Is the pay not good enough for them? What is the reason for all of this?
“Over the last 40 years, wage growth for typical American workers has been extraordinarily weak. The typical worker has certainly gained some ground—especially over the last 25 years—and different inflation adjustments can make those gains appear somewhat larger. But by any measure, wages at the middle have grown more slowly than at the top and more slowly than the economy overall. In addition, fewer Americans are earning more than their parents did at similar ages, perhaps explaining discontent with the economy despite the consistent economic growth and low unemployment rates. Many presidential candidates highlight this discontent.” “Just as important as higher minimum wages is the tightening labor market of 2014–18, which raised demand for low-wage workers and may have complemented minimum wage increases by offsetting any tendency of employers to hire fewer workers in response to the increases. In the years immediately following the Great Recession, the large number of jobless workers likely held down wages, particularly at the bottom of the wage distribution. A growing body of research indicates that low-wage and disadvantaged workers benefit disproportionately from tighter labor markets. The prolonged slack after the Great Recession is evident from an unemployment rate that stayed above its pre recession low until late 2016 and a prime-age labor force participation rate that is still not quite back to its prerecession level. It took until 2016 for the 10th percentile of wages to exceed its 2009 level. By contrast, the 90th percentile of national wages declined very little and had already exceeded its 2009 level by 2011. In short, tighter labor markets in the last five years seem to have provided more benefits to those at the bottom.”
https://www.brookings.edu/policy2020/votervital/whose-wages-are-rising-and-why/
https://www.brookings.edu/policy2020/votervital/whose-wages-are-rising-and-why/
From what I am understanding from this article, I noticed that even though people still feel like wages are extremely slow. As a country, we still see an increase in wages rising over the last 40 years. The reasons for weak long-run wage growth include the declining rate of private sector union membership. The proliferation of anti-worker labor arrangements like non-compete clauses in employment contracts. Ongoing globalization and exposure to international competition. Concentration in both output and labor markets, and declining business and labor market dynamism that resulted from several of these developments.
|
The Labor Department’s monthly employment report showed employers added 45,000 new jobs in December 2019, while the unemployment rate held steady at 3.5%, a 50-year low.
But wage gains were disappointing. Average hourly earnings of private-sector employees rose 2.9% year over year in December. The rate of growth hovered just above 3% for most of 2019. With unemployment so low, economists expect employers to be under more pressure to increase pay.“Lack of wage growth has been the biggest puzzle for the last several years,” said economist Aparna Mathur at the American Enterprise Institute. Mathur said that even with the official unemployment rate so low, there is still significant slack in the labor market: millions of long-term unemployed, part-time workers looking for full-time work, and people on the sidelines ready to jump into the workforce. “The more people who keep entering,” said Mathur, “the less pressure on employers to pay higher wages.” Plus, a lot of the jobs created since the Great Recession have been in service industries, she said. “The kinds of work that people are finding may be contingent, contractual — not high-wage jobs with benefits.” Where employees do get benefits like health insurance, the cost is rising, eating into what employers have left for raises. But this isn’t just a last-few-years story. Wage growth was even lousier, in the 1.5% to 2.5% range, through most of the past decade, according to data compiled by the Federal Reserve Bank of St. Louis. Economist Elise Gould at the Economic Policy Institute said the depth of the Great Recession and the slow pace of the economic recovery depressed wage growth for years. And she also pointed to longer-term economic changes: “The reduced leverage that workers have — the decline in unionization, the declining value of the federal minimum wage.” Economist Mark Zandi at Moody’s Analytics said that the sluggish wage growth of the last decade is in line with weak worker-productivity growth. He pointed out that since inflation has been relatively low, even moderate wage gains are delivering more purchasing power to workers. Zandi speculated that in the past couple years, the escalating trade war with China has undermined business confidence and made employers hesitant to hike pay. “Now that we have a truce in the trade war,” Zandi said, “businesses may start to feel a little bit better about things, and we should see wage growth begin to pick up again.” https://www.marketplace.org/2020/01/10/wheres-the-wage-growth/ |
|
In this article, I learned that wages are slowly starting to increase even due to everything starting to be shut down again due to the second wave of coronavirus. In all honesty, it seems as the U.S is starting to do a better job of providing people with a better opportunity for work. I feel that since the election is over for the most part, people are starting to calm down and accept the results for what they are worth. I knew in the back of my mind that the whole shutdown thing wouldn't last forever because we can’t keep living in fear. Our economy would totally crash if this was the case. People were also sick of not being able to live a normal life.