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Wages are flat now, but maybe not for long

Sabri Ben-Achour May 2, 2014
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Wages are flat now, but maybe not for long

Sabri Ben-Achour May 2, 2014
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Some very good news out of the Bureau of Labor Statistics today: There were 288 thousand jobs added in the last month, more than many people expected. Unemployment is now down to 6.3 percent. Of course down is not the same as low, but there was one piece of information that was not changed – earnings. Wage growth did not move over the month. 

Over the past 12 months by several measures wages have grown about two percent. On the other hand, inflation has run around 1-1.5 percent. Since inflation devalues wage growth, real wages have increased very little. Ideally, inflation would be near two percent, and wage growth a percent or two above that. 

Despite March-April’s flat numbers, the two percent growth over the year has marked an improvement.    

The economy may be in the process of early movement in that direction. The more jobs are created, the less workers are trapped in jobs that don’t offer raises, and the more employers will be pressed to raise wages to remain competitive.

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