Economy is booming, but when will wages rise?
Ten years after the Great Recession, most would agree that the U.S. economy is as strong as ever. With low unemployment and a growing GDP, Americans are feeling much more comfortable about the economy.
Yet a concerning trend lurks underneath an otherwise booming economy: slow wage growth.
Average real wage growth rate is up just 0.6% since this time last year.
Meanwhile, inflation is running at a 2.9% rate for the yearlong period ending in June, the highest inflation rate since 2012. Apartment rental rates are up 3.6% in that time, restaurant meals cost 2.8% more and the price of gasoline has increased 24%. The current inflation rate is, historically, on the low side, but when wages don’t keep up with inflation, employees lose ground.
Wages are supposed to respond in close correlation to supply and demand. When unemployment is low, as it is now (4%), pay usually rises. That hasn’t happened.
Labor economists assume that, in general, wages should rise about 3.5% per year. Yet according to the Bureau of Labor Statistics, since the Great Recession ended in June 2009, wages have only achieved an annual growth rate of 2.7%.