If you’ve been waiting for a fatter paycheck to find you in 2015, so far the news has been discouraging. Unemployment rates are down, which is exciting news, but we still haven’t seen an improvement in wages. Here’s why a lower unemployment rate hasn’t translated to higher pay — yet.
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Last month, average hourly earnings actually fell 5 cents per hour, despite a jobs report from the Labor Department that beat analysts’ expectations at 240,000 jobs. The PayScale Index, which measures the change in wages of employed U.S. workers, showed a 1.8 percent increase in wages over the fourth quarter of 2014, and predicts a 1.7 increase for the first quarter of 2015 — hardly blockbuster numbers for a workforce that’s still struggling in the wake of the recession. The question for economists is, why aren’t these job numbers translating into higher wages?
“Probably the real answer to that is that there’s still more slack in the labor market,” explains Harry Holzer, former chief economist for the Labor Department, in an interview with NPR. In other words, the employment numbers don’t capture the full picture, which includes workers who have removed themselves from the labor force after years of trying to land a job, or who are cobbling together a living by working part-time.
So, what does all this mean for the immediate and long-term future?
1. We can’t rely on a rebound in wages, at least not anytime soon.
2. Just because the unemployment rate is down doesn’t mean we’re really that much better off than we were.
3. Education is key to a growth in individual wage levels, which is why President Obama is advocating for a free community-college education.
4. Stagnation of wages is influenced by many factors in the labor market, including (but not limited to): “the decline of unions and the rise of globalization,” according to The Fiscal Times. We’re seeing jobs shipped overseas, and we’re also see troubling realities as far as collective bargaining is concerned here at home.
5. As we begin to slink out of the recession depths, there’s a perception that the poor have it easy and that they don’t work hard enough. Meanwhile, the poor face mounting economic and social issues — they make less money than before and are then face crime, food scarcity, and the general lack of education.
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