Economists at the Federal Reserve and elsewhere have struggled to understand why wage growth remains slow even as the economy approaches full employment.
“Wage growth remained sluggish in August even as second-quarter GDP growth rose to meet President Donald Trump's 3 percent target.
“Average hourly private-sector earnings rose 2.5 percent in August over the previous year, the Labor Department reported on Friday, the same as in July. The economy added 156,000 jobs in August, down from 189, 000 in July.
“Trump said last month that wages haven’t “gone up for a long time.” That wasn't quite right. As Gary Burtless, an economist at the Brookings Institution, explained to Politifact, a fact-checking organization run by the Tampa Bay Times, ‘Real wages have been rising more slowly than anyone wishes, except perhaps employers. Nonetheless, they have been rising.’"
August's jobs report showed lower than expected job growth. But sluggish wages are the real story. For the 5th consecutive month, wages grew at a dismal 2.5 percent. At the same time, the stock market continues to surge and corporate profits soar.
Nothing trickles down.
Why are workers getting the short end of the stick? Because low-wage service jobs are growing faster than jobs in well-paid sectors. Many job seekers who have been in and out of the labor market since the Great Recession are just happy to find a job regardless of how little it pays. In fact, a recent survey by the federal reserve found that American workers have lowered their expectations for salaries. This is exactly why we need to increase the minimum wage.
At the other end of the economic ladder, the top one percent and wealthy corporations reap the benefits. According to the Bureau of Economic Analysis, corporate profits have grown by a whopping 8 percent over the past year. The economy has become dangerously unbalanced.
Trump's massive tax giveaways will only make it worse.
By Marianne Levine
