Some observers write as though we are waiting for wage growth to return to normal. We just need money wages to grow a little more and inflation rates to fall a bit and we’d be back on the right track. But what’s normal? For example, how often since 2000-2017 has the real wage of average employees increased at least 1% a year? In only four of eighteen years: 2001, 2002, 2014, 2015.
If you want to feel good for five seconds, the latest earnings report shows that real wages for average employees are up since September of 2017. But the increase is just 0.4%–less than a half a percent. That’s what we are getting in what is supposed to be a red-hot labor market and a strong economy–so strong that the Federal Reserve is raising interest rates to cool it down.
So for workers the economy is good but not great, and has been so for years. Basic power structures and institutions lean heavily against the working class. Unions cover few workers. Some states and localities are raising their minimum wages, but many are not doing so, and the federal minimum wage has been stuck at $7.25 for years.
And while labor markets are good, and causing wage upticks in some places, there is no generalized shortage of labor–nothing dire enough to push up money wages to increase 4 to 5% a year. Employers aren’t used to having to expend real effort to get medium to low-skilled workers. When they have to exert, they think it’s a labor shortage. But…