Slow wage growth reflects workers staying put

Average hourly earnings in June, which is, to say, wages, were up 3.5% percent from the same time a year ago. That’s up a tick from May.

But the longer-term trend is decidedly mediocre. Last summer, wages were growing at close to 4%. And the big problem for workers, who are also consumers, is that prices are moving up faster.

Right now, the labor market doesn’t have a lot of oomph. Hiring is middling, so people aren’t really changing jobs — which is key to getting paid more.

“You don't get bargaining power for wages from a job you have, you get it from the job that you could take,” said Kory Kantenga, head of economics, America, for LinkedIn.

It’s difficult to just go into your current boss, and say, “hey, pay me more.” It’s a lot easier if you can tell them, “hey, these other guys are gonna pay me more.”

But right now, those offers aren’t so plentiful, and workers are staying put.

“So we're not going to be seeing wage growth go up until we start to see more workers quitting their jobs and finding new ones,” Kantenga said.

Another potential factor? Health care premiums are going up. Economist and senior fellow Guy Berger with the Burning Glass Institute said that eats into employers’ pool of cash.

“They have to fork over more money for that, and to the degree that happens, there's less money left over for raises or giving people bonuses,” he said.

And if wages aren’t keeping up with with prices, workers simply can’t buy as much.

“So now you're getting into the area of, ‘let's make choices,’” said Belinda Román, a professor of economics at St. Mary’s University in San Antonio. “How do we eat? What do we eat? Do I buy my medicines? What am I going to change… But like good Americans, we also want to have fun, so we'll probably go spend and put it all on credit.”

But if we do spend less, Kantenga said there are ripple effects for the whole economy.

“If spending slows down, that slows down overall growth, which again shrinks opportunities for workers,” he said.

Kantenga said if you want to figure out if wage growth is gonna pick up, keep an eye on how many people are quitting their jobs. Some of them are probably leaving for one that pays more.