Tuesday, November 10, 2015

Why Isn't Pay Increasing?

A common grouse about the economy is that income is not going up for most workers.

This is only partly true. Compensation is going up normally. That's what the firms pay out. But workers are choosing (or complicit with) compensation increases going to things other than income.

And then we complain because our income hasn't gone up. That's kind of immature.
Average hourly wages have grown slowly since the end of the recession in mid-2009, advancing at a pace of about 2% annually or about 12% since the expansion began, despite steady job creation. In the 20 years before the most recent recession, hourly earnings grew, on average, better than 3% annually. Weak wage growth has been blamed for a wide range of soft spots in the economy, including uneven consumer spending, historically low inflation and many renters’ inability to purchase homes.
Benefits, meanwhile, have increased at a slightly faster clip, 15% since the expansion began. That’s actually a continuation of a much longer trend. Since 2001, benefits increased nearly 60%, while wages advanced 40%.

So, all those stories you hear about the great perks of working at, say, Google, contribute to the data showing that wages and salaries aren't going up as fast as we would like. That's been mostly a talking point for the Democrats over the last few years. And yet both parties are showing a modest increase in mandating something like paid family leave.

Read the whole thing, entitled "Paying with Perks May Carry Cost" in the November 2 print issue of The Wall Street Journal or online in the retitled piece "Shift to Benefits From Pay Helps Explain Sluggish Wage Growth".

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