Everybody’s got an opinion on why wages are stuck
The latest employment report from the federal government has a better-than-expected top-line number: 292,000 new jobs created in December. But there’s more when you dig deeper: Wages still seem to be stuck.
When I started talking to labor experts for this story, one thing became clear: Everybody’s got an opinion on why wages aren’t rising faster.
Opinion number one is from Seth Harris. A former acting labor secretary in the Obama administration who now teaches public policy at Cornell University’s School of Industrial and Labor Relations.
“There are far too many workers for too few jobs,” Harris said.
Harris said there are still a bunch of people on the sidelines — people who’d like to work but have given up looking for a job, or part-time workers who’d like a full-time position.
With a big labor pool, employers don’t have to raise wages to attract workers. So, average hourly earnings rose just 2.5 percent in 2015. Normally at this point in an economic recovery, they’d be increasing 3 or 4 percent.
And then there’s opinion number two:
“There has been a marked shift in the way workers take their pay home,” said Andrew Chamberlain, chief economist at the website Glassdoor.
Chamberlain said about 10 years ago, 29 percent of the average paycheck came in the form of benefits. Today, it’s more than 31 percent.
“If people are taking more compensation in the form of benefits, they will take less in the form of wages and that will depress the official wage numbers,” he concluded.
Of course, that’s only for people in jobs with benefits. Chamberlain also said productivity needs to pick up before we see healthy wage gains.
And that brings us to Gary Chaison, who teaches labor relations at Clark University. He maintains productivity may play a role, but “we’re really not quite sure what’s going on over here,” he said. “The problem is everyone’s trying to twist the data to support their own point of view.”
Chaison’s opinion? You can have a million theories. But there’s only one conclusion:
“This is not normal,” he said. “But it’s going to become the new normal.”
The question, Chaison said, is what are we going to do about it?
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