Welcome economic news for American workers

For years, economists have been predicting higher wages for American workers. This does not happen. Over the past year, Americans have seen their hourly wages increase by just 2.5% as wages have slowed over the past four months.

The inability of wages to take off, even with unemployment down to lowest level since 2001 and the economy, which has created 1.2 million jobs since January, has pundits scratching their heads. “The real world has confounded the established pattern,” said Steve Rick, chief economist at CUNA Mutual Group.

The averages, however, hide a lot of variability. And one area where wages have started to rise is for workers whose jobs pay minimum wage or just above.

“If you look at the rate [of wage growth], the lower quartile is growing much faster than this average. This is very good news,” said Cathy Barrera, chief economic advisor at ZipRecruiter.


Source: Institute for Economic Policy

Thanks in large part to laws that raised minimum wages in a number of states earlier this year, the lowest-paid 10% of workers have seen the fastest wage increases of all workers over the past year. of the first half of this year. This group saw their compensation increase by 5% between the first half of 2016 and the first half of this year, according to an analysis of Department of Labor data by the Economic Policy Institute. Over the previous decade, their wages barely budged, while higher-paid workers made gains.

Glassdoor data further confirms this trend. In a report published this week by the salary research firm, the fastest growing salary is in starting low-paying jobs. Besides increases for recruiters — a product of many employers’ difficulty in filling jobs — the biggest pay increases have been for baristas, restaurant cooks and bank tellers, all of whom earn less than $30,000. per year. Salary for baristas increased by 6.4% over the previous year; cooks and cashiers grew by more than 5%.


Source: Glassdoor Local Salary Reports, July 2017

For most of the economic recovery in the United States, wage gains have largely gone to the highest paid workers. The resulting inequality has been a public policy issue in a number of cities and states that have raised wage floors. The fact that employers are still adding significant numbers of jobs six months later suggests that these hikes have not had the job-destroying effects that some in the business community feared. But it also illustrates how much of a gap remains between the lowest-paid and the highest-paid workers.

As EPI’s Senior Economist, Elise Gould recently wrote“Most workers are just beginning to make up lost ground rather than moving forward.”

But with wage growth above 5% in some occupations, why is the average number so stubbornly low?

It turns out that increases at the bottom of the income distribution are accompanied by stagnation in the middle, as white-collar jobs are increasingly replaced. Office administrators, financial advisers and retail buyers are seeing their salaries stagnate or fall. Operations analysts, the group with the biggest drop in revenue, earned 3% less this year than last year.


Source: Glassdoor Local Salary Reports, July

“Retail buyers and office managers — they’re competing with automation today,” said Andrew Chamberlain, Glassdoor’s chief economist. “Today, there are a lot of offices that do without an office manager: they order supplies on Amazon Prime and check in at the front desk with an iPad. Loan officers are under the same pressure. It is possible today to request a credit limit increase completely online, without ever dealing with a person.”

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