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.”

Click the image to read more.


8 Replies to “Why Aren’t Wages Rising Faster?”

  1. This issue has been a big topic for a while and I enjoy speaking about it, I feel the real reason wages are not increasing is because there is a little greed in everyone, the increasing gap of inequality shows how the rich get richer while the poor get poorer, I feel as if even though walk-mart and big name companies are starting to increase wages due to pressure they will stall until they have to increase wages. I also feel as if Minimum wage is not even close for someone to live on and it is forcing many people to get 3-4 jobs. Even with Inflation in the mix I dont see wages increasing to a reasonable price anytime soon.

  2. I feel like the reason stores like Walmart jumped their pay grade so high is because when the “new” minimum is set they will not have to adjust for it. If they set the standard higher than other companies, it will make other companies raise their wages higher than the minimum. This can than create the federal government to not have the need to create a minimum wage. However, a minimum wage is important because people cannot live off anything lower than that. With inflation, wages need to increase at a faster pace to make a difference in society because the poor will stay poor if the increase only matches the inflation.

  3. Having worked at minimum wage jobs before I know the frustration that comes with wondering why the U.S has some of the lowest minimum wages in the world. Fortunately for me, I have a family to depend on for financial support. However, for those who have to support themselves, the minimum wage is just not enough for one person to fully support themselves. I agree with the wages being brought up and I hope they do so soon.

  4. I think it’s great that wages have rose the most they have in 6 years. This is encouraging for workers and shows that mandated change is probably just around the corner. Big stores like Walmart are already starting the movement. It’s only a matter of time before more and more companies hop on the band wagon. It also brings positive publicity to the company who agrees to increase wages.

  5. I think this problem gets over-simplified. You cannot just increase minimum wage and then expect the wealth disparity to be corrected. Yes, increasing minimum wage would temporarily provide financial relief to the low income families, but companies would in turn either need to cut their CEO’s and owner’s salaries (not going to happen), raise their prices (which would proportionally put the low income families right back in the same spot), or they would have to fire some employees (which would harm those families even more). Until the issue of extremely high salaries for CEO’s is fixed, I don’t see this changing just by increasing the wages.

  6. I believe there are a variety of reasons as for why the minimum wage isn’t rising. I believe it starts from the top in that everyone is greedy. A CFO making 10 million dollars a year probably could reduce it to 9 and help out so many employees who make minimum wage but instead he or she thinks so highly of themselves and wont change. This type of attitude is probably spread around the whole company and therefore nobody will sacrifice to help for others, leaving people at the bottom of the company without any help and struggling.

  7. U.S economy has recovered in a slow pace from the financial crisis in 2008. The possibility for the Fed to raise interest rates drives the recent strength of dollars against other currencies. The monetary policy divergence draws attentions to whether U.S economy is doing well compared to other countries. But the first quarter’s slow growth in GDP really frustrated many economic experts even some optimistic economists argued that the bad weather played a significant role in the first quarter. The prospects of raising wages would be linked to the real performance of the U.S economy.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.