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Job Report Shows Wages Aren’t Rising

A government report on job creation that was published last week has economists worried that wages are rising very quickly. The problem: sluggish economic growth and high unemployment.

According to an article on CNN.com, the unemployment rate could be hindering workers from getting raises. Heidi Shierholz, an economist at the Economic Policy Institute noted that, “If your employer knows you don’t have a lot of options, there’s no incentive to give you a raise. It shifts bargaining power away from workers and toward employers.”

The Bureau of Labor Statistics reports that over the past year the average hourly wage for jobs in the private sector increased from $23.12 an hour to $23.52 an hour, a gain of 1.7% that is just slightly higher than infalation. But when managerial and professional jobs weren’t included, wages rose only 1.2%, which is below the rate of inflation. According to the article, 82% of private work is non-managerial jobs.

Another factor affecting wage growth is that most of the new jobs being created are in low wage industries. And high unemployment forces people to take these types of jobs. Almost 40% of jobs created in the private sector have been retail, leisure and hospitality, temporary staffing and home health care.

The article notes that without wage growth, consumers aren’t encouraged to spend more, which does not help the growth of the economy.