Why is wage growth so slow

Unemployment is really low but wage growth is non-existent. I have argue corporations are using deep data mining and analytics for fixing prices while keeping wages depressed through price fixing from government reports. Of course, I am not an expert on this subject but here is a pretty good article for EPI.org. Supposedly non-partisan but just talking about wages makes you a communist according to right wing ideology.

Anyway, here's the article. I think it's pretty good. It doesn't mention Trump but maybe that's why many people will not like it:

Why is wage growth so slow? It’s not because low-wage jobs are being added disproportionately

"Despite an unemployment rate that averaged 4.1 percent over the last 12 months, the average real (inflation-adjusted) wage of private sector workers did not grow at all over this period. Part of the reason is an increase in energy prices, which is likely to be temporary, but our slow wage growth has mostly been driven by nominal wages failing to rise quickly even in the face of low unemployment.

One explanation worth looking into is whether today’s low wage growth is due to a composition effect—i.e. low-wage jobs being added faster than middle- and/or high-wage jobs and, as a result, pulling down wage growth.

Composition was certainly a factor during the early part of the recovery from the Great Recession. In the first few years of the recovery, the jobs being added were very disproportionately low-wage jobs, which had the effect of pulling wage growth down over that period. But since 2013, as the recovery has strengthened, the opposite has been true—low-wage jobs are actually declining on net while middle and high wage jobs are being added, which has the effect of raising average wages. In other words, the composition effect is currently putting upward pressure on wages.

The two charts below show this shift, by showing job growth across the wage distribution from 2010 to 2013 and from 2013 to the present. The dots on the charts are provided as benchmarks—they show what employment growth would have been at each wage level if jobs had grown at the same rate across the entire wage distribution. Thus, if a bar is above its dot, job growth was faster than average at that wage level, and conversely, if a bar is below its dot, job growth was slower than average at that wage. The two charts show a clear shift in the pattern of job growth. In the first few years of the recovery, the economy produced rapid job growth in low-wage jobs and weak growth in middle-wage jobs. But since 2013, the economy has shifted to a pattern of stronger growth in middle- and high-wage jobs and slower than average growth at the bottom. The basic shape of the second figure does not change if the time period is restricted to the last year alone; we used the longer period to emphasize the major shift in job growth patterns that occurred in 2013."

www.epi.org...

We flood the market with cheap, illegal labor and it depresses wages overall. This is one of the reasons people are so opposed to illegal invaders.

a reply to: Metallicus

Actually that is complete rubbish.

First, labor’s bargaining power falls as unions weaken. Between 1979 and 2013, the share of private sector workers in a union fell from about 34 percent to 10 percent among men, and from 16 percent to 6 percent among women. A 60-year-old so-called “Right to Work” movement has won policies that weaken labor bargaining power in states across the nation. The movement lobbies states to ban voluntary union security clauses, which reduces union revenue, making it harder to organize and even function. This strategy also attacked public sector unions. Last month the Supreme Court, in Janus v AFSCME, voted 5 to 4 to hobble those unions as well.

Unions also help pass minimum wage laws. The real minimum wage of $7.25 today has lost real value since the 1968s when it would have been over $10.90 today.

Second, worker fear is on the rise, even with a very low unemployment rate. Former Fed chief Alan Greenspan keenly watched for labor power indicators – he knew about the fear factor. He believed surveys about work insecurity and fear of leaving jobs to get better ones was a good barometer of actual worker sentiment. In 1997, he reassured Congress that fear was on the rise so Fed policy would not create inflation because workers were too afraid to ask for a raise.

Quit rates are up since the recession – FT columnist Sarah O’Conner calls it “the take the job and shove it” rate – but quit rates were higher in 2002 after the tech bubble recession. 67% of Americans answer that this is a good time to find a quality job, which is the highest since first polled in 2002. But, people feel just as likely to lose their jobs now, when the unemployment rate is 4%, as they did in 1991 when the unemployment rate was over 7%.

Third, super firms are achieving more and more market power. Consumers may get lower prices, but employees get lower wages. The gap is widest in the information sector where FAANG – Facebook, Apple, Amazon, Netflix, and Google—dominate. Large firms simply have more control of markets than they did before: profits rise and prices fall. When consumers and shareholders win, workers lose. The Obama Council of Economic Advisors first pointed to the rise in monopsony labor markets, a situation where workers are tied to employers and have less choice about moving to another employer. Economist Kate Bahn explains how monopsony works to lower wages.

Fourth, new jobs in demand are low-wage jobs. Low-paying jobs will dominate job growth in the next decade. Projections are for 1.2 million new openings for personal care aides and home health aides where the average annual wage is under $24,000. Demand for health care services means the new labor supply in demand is female and older. Not the groups with lots of bargaining power to begin with. Among the ten occupations with the most employment growth, only three will pay above average: software developers, registered nurses, and managers.

All job growth is gray: employment increased by 17 million from 2000 to 2017 and the number of workers over age 50 grew by 17 million. More older workers don’t automatically mean wages fall. But, older people are getting worse jobs as they stay and enter the market in the face of weak retirement income security.

Between 2005 and 2015, the growth in older workers' unstable and low-wage jobs outpaced growth in jobs offering decent pay or stable employment. By 2015, nearly 1 in 4 older workers were in bad jobs. Bad jobs include the alternative work arrangements of on-call, temp/contract, and gig jobs (excluding independent contractors) and low-wage traditional jobs (paying less than $15,000).

Bottom line: economics is not a science of ethics and justice, but we have opinions about economic growth and fairness and justice. The justice proposition is that “inputs,” including management and labor, should get their share in the production process for markets to work efficiently. Economists are pretty much convinced that worker productivity has delinked from worker pay and that government policies tilted in favor of capital over labor. How the pay and productivity gap, growing since the 1980s, might ignite outrage and political reform is an open question.

So using your theory illgals are coming in and stealing all the tech jobs? LMFAO

originally posted by: dfnj2015
Unemployment is really low but wage growth is non-existent. I have argue corporations are using deep data mining and analytics for fixing prices while keeping wages depressed through price fixing from government reports. Of course, I am not an expert on this subject but here is a pretty good article for EPI.org. Supposedly non-partisan but just talking about wages makes you a communist according to right wing ideology.

Anyway, here's the article. I think it's pretty good. It doesn't mention Trump but maybe that's why many people will not like it:

Why is wage growth so slow? It’s not because low-wage jobs are being added disproportionately

"Despite an unemployment rate that averaged 4.1 percent over the last 12 months, the average real (inflation-adjusted) wage of private sector workers did not grow at all over this period. Part of the reason is an increase in energy prices, which is likely to be temporary, but our slow wage growth has mostly been driven by nominal wages failing to rise quickly even in the face of low unemployment.

One explanation worth looking into is whether today’s low wage growth is due to a composition effect—i.e. low-wage jobs being added faster than middle- and/or high-wage jobs and, as a result, pulling down wage growth.

Composition was certainly a factor during the early part of the recovery from the Great Recession. In the first few years of the recovery, the jobs being added were very disproportionately low-wage jobs, which had the effect of pulling wage growth down over that period. But since 2013, as the recovery has strengthened, the opposite has been true—low-wage jobs are actually declining on net while middle and high wage jobs are being added, which has the effect of raising average wages. In other words, the composition effect is currently putting upward pressure on wages.

The two charts below show this shift, by showing job growth across the wage distribution from 2010 to 2013 and from 2013 to the present. The dots on the charts are provided as benchmarks—they show what employment growth would have been at each wage level if jobs had grown at the same rate across the entire wage distribution. Thus, if a bar is above its dot, job growth was faster than average at that wage level, and conversely, if a bar is below its dot, job growth was slower than average at that wage. The two charts show a clear shift in the pattern of job growth. In the first few years of the recovery, the economy produced rapid job growth in low-wage jobs and weak growth in middle-wage jobs. But since 2013, the economy has shifted to a pattern of stronger growth in middle- and high-wage jobs and slower than average growth at the bottom. The basic shape of the second figure does not change if the time period is restricted to the last year alone; we used the longer period to emphasize the major shift in job growth patterns that occurred in 2013."

www.epi.org...

It always goes back to supply & demand for workers.

If unemployment is low AND wages are still not rising, then the only variable remaining is supply of workers. In other words, there are still a lot of workers at the low end keeping wages low. This is why continuing to importing low skilled illegals is economic suicide.

Liberals cannot argue for unfettered immigration and then in the same breath also complain about low wages.... well liberals do, but we know logic isn't the strong point of the left.

a reply to: dfnj2015

Because corporations are too damn cheap to pay a living wage. Wife works at a place that pays WELL. It's not stupendous, but it keeps us from starving. Previous place was paying slave wages for the same job (and they also went out of business She got some sort of transfer thing or something).

a reply to: dfnj2015

From the OP source:

What is most likely happening is that worker leverage and bargaining power have been so decimated by policy choices—policy choices that have, for example, led to the erosion of union coverage and labor standards like the minimum wage—that for tight labor markets to spark upward wage pressure the economy requires a much lower unemployment rate now than it did in the past. The solution is clear: we need the Federal Reserve to allow the unemployment rate to continue to drop, and we need policies to shift bargaining power back to workers.

The last round of GOP tax "reform" (have to laugh when I hear them talk about it like that) is just more of the same trickle-down / supply side / voodoo economics as has been practiced since the Reagan era. And whatever the glowing promises made, and whatever anybody may think about that model philosophically, it is unarguable that it has failed, in terms of building a strong economy and culture.

Trickle-down depends on the people with money having some degree of social consciousness, such that they really do invest in new things, make money and share the profit appropriately with the people who actually do the work.

This has not happened. The repeated tax cuts remove economic incentive to spread the wealth around - which makes for a healthier economy overall - and creates incentives for wealth to be hoarded among the very few. Which makes them feel better, I mean, hell, how can anybody be expected to live if they only have $20 billion, instead of the $60 or $80 billion that is the bare minimum to live right? But that sort of economic concentration is terrible for the country, and ultimately for them. It increases social upheaval and discontent, just to name one problem with it.

The real irony is that trickle-down COULD work, if the tricklers had any decency. They don't, so it doesn't. And we are seeing the result of the stupidity and insanity of the GOP to keep trying harder at a proven failed approach. Of course, the GOP in its current form doesn't consider the approach to have failed, because the already-rich are getting richer at the expense of everybody else. Since that is the goal, they consider it a success.

originally posted by: Metallicus
We flood the market with cheap, illegal labor and it depresses wages overall. This is one of the reasons people are so opposed to illegal invaders.

What jobs are illegals taking? Landscaping? Dishwashing? Unskilled contracting/day jobs? Produce harvesting? If you're losing your job to an illegal you need to rethink your employment value.

The people who used to do these jobs, high school/college age people are the ones that take the hit from this, assuming they want to do this type of work, not the skilled associate.

a reply to: dfnj2015

unemployment rate that averaged 4.1 percent

have you considered that might not be a sincerely accurate measurement of the unemployment rate

a reply to: Stevenjames15

I think unions are the reason living g in markets saturated with them such as south California metro or NYC are so expensive to live in.

Every job that can possibly be off-shored , is.
Those folk work for tens of dollars/day. With no labor laws , overtime is not paid for the most part.In some cases the US corps can work them 20 hr/day at that same pay . On the good side ? Tens of USD/day is a fairly good wage in a lot of countries.
Once the person has been there a while they shove em out of the seat and move someone else in.
Or , find another country that is cheaper to exploit.

The same happens to the US employees . The older , higher paid employees are given the old boot , and someone is hired straight out of school and off the streets. Never mind the word "experience" . When it is time for a raise ? Wash , rinse , repeat.
There is your answer to your question.
Anything else I can help you with today ?

a reply to: Stevenjames15

Well said. Monopsony — ‘buyers market’ — being well-articulated on ATS is a first. As it relates to the supply of available workers, here is a nice piece on males falling out of the labor market: Fed Chairman Says Opioid Epidemic is Keeping High Percentage Out of Labor Market

Why is wage growth so slow

What's slow about it ?

People make more, have more benefits than ever.

All that takes $$ out of your employers pocket.

originally posted by: Metallicus
We flood the market with cheap, illegal labor and it depresses wages overall. This is one of the reasons people are so opposed to illegal invaders.

There is absolutely no evidence to support what you are saying. Almost everything is made in China. The Chinese have pegged the Yuan 6 to 1 against the dollar. The dollar is a unit labor cost. This means a CEO pretty much gets 6 Chinese workers for everyone 1 American worker. There's a little bit of overhead in shipping costs of goods. But regardless, no one person can compete with six Chinese workers.

Blaming so called "illegal labor" for our problems is just scapegoating. Scapegoating is a proven method for politicians to rise to power. People love hating other people for their own problems.

a reply to: dfnj2015
I don't know man. I know somebody who started a wage job at a gas station in March at 11.50 . He is now at 13.00 and got promoted. But he loves to work, and lives to keep his hands and time occupied. People's who do not like to work hardly see their wages increase for good reason If you ask me.

originally posted by: neo96
Why is wage growth so slow
What's slow about it ?
People make more, have more benefits than ever.
All that takes $$ out of your employers pocket.

Contrary to your delusions, the data referenced in the article does not support what you are saying:

www.bls.gov...

And then there is this:

www.quandl.com...

Whatever is happening, given our extreme wealth inequality in this country, laissez-faire capitalism is just not working. At some point the system stop serving the worker making the median wage and now everyone is a slave to the system. If you can't see it, or deny it, then you are not paying attention.

originally posted by: dfnj2015

originally posted by: Metallicus
We flood the market with cheap, illegal labor and it depresses wages overall. This is one of the reasons people are so opposed to illegal invaders.

There is absolutely no evidence to support what you are saying. Almost everything is made in China. The Chinese have pegged the Yuan 6 to 1 against the dollar. The dollar is a unit labor cost. This means a CEO pretty much gets 6 Chinese workers for everyone 1 American worker. There's a little bit of overhead in shipping costs of goods. But regardless, no one person can compete with six Chinese workers.

Blaming so called "illegal labor" for our problems is just scapegoating. Scapegoating is a proven method for politicians to rise to power. People love hating other people for their own problems.

Companies would off shore the jobs to lower cost Chinese markets if they could.... they haven't yet figured out how to offshore fast food workers, lawn care, construction workers, movers, etc.

Illegals most certain do the above jobs. Increased supply of workers lowers wages.

Your argument makes zero sense...

originally posted by: worldstarcountry
a reply to: dfnj2015
I don't know man. I know somebody who started a wage job at a gas station in March at 11.50 . He is now at 13.00 and got promoted. But he loves to work, and lives to keep his hands and time occupied. People's who do not like to work hardly see their wages increase for good reason If you ask me.

A appreciate your participation in the conversation. But, no matter how hard you work, and no matter how hard you want to work, the data simply does not support your simple idea that the worker is at fault here:



There is more going on here than just bad attitudes of workers.

a reply to: Edumakated

People who do not speak English generally do not work in fast food restaurants in my area. Lots of landscaping work however.

If you want to get rid of illegal workers then just pass some laws and start putting employers in real jail time if they hire someone illegally with payroll taxes not on the books.

originally posted by: dfnj2015

originally posted by: neo96
Why is wage growth so slow
What's slow about it ?
People make more, have more benefits than ever.
All that takes $$ out of your employers pocket.

Contrary to your delusions, the data referenced in the article does not support what you are saying:

www.bls.gov...

And then there is this:

www.quandl.com...

Whatever is happening, given our extreme wealth inequality in this country, laissez-faire capitalism is just not working. At some point the system stop serving the worker making the median wage and now everyone is a slave to the system. If you can't see it, or deny it, then you are not paying attention.

Your purchasing power chart is meaningless without comparing standard of living... are you really going to argue that someone in 1920 had a higher standard of living than someone in 2018?

The uber wealthy in 1920 had a lower standard of living than our poorest people today. How many poor people in 1920 could buy a car (ANY CAR)? Hardly none... Almost anyone can buy a car today. How many people in 1920 had air conditions? NONE. 80% of US homes have air conditioning today. How many people in 1920 had say 10 pairs of shoes? I can show you kids in the ghetto with 20 pairs of sneakers. Using an outhouse in 1920 was common place. 99% of US homes have indoor plumbing nowadays.

a reply to: dfnj2015

Household assets $100 Trillion dollars.

www.usdebtclock.org...

Back to the DELUSION of income inequality.

Ps everyone has links.