Why Aren’t Wages Going Up?

Posted March 16, 2015
By Clay Cerny


Bloomberg’s Peter Gosselin and Jennifer Oldham have written a great article that examines the relationship between unemployment and wages. According to accepted economic norms, as the labor market gets tighter, salaries should go up. While the unemployment rate has dropped 5.5% over the last seven years, the growth in hourly earnings was minimal. On the state level, the difference is even more pronounced in states that have the lowest unemployment. The article features some compelling graphs and possible explanations for this trend.

What the article doesn’t speculate on is a possible tipping point. I think it is significant that Walmart and other large retail corporations are raising salaries of their lowest paid workers. I think they are increasing wages to keep good workers who can now find higher paying jobs.  Once retention of employees becomes an accepted business practice across industries, salaries will go up – I hope.