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Economic Perspective: Finally, faster wage growth
Story Date: 12/21/2016
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Source: Dr. Mike Walden, NCSU COLLEGE OF AG & LIFE SCIENCES, 12/19/16
Mary Walden:
“Today’s program looks at finally, faster wage growth. Mike, for several years during the current economic recovery jobs increased, but wage rates didn’t. Now rates appear to be growing. Why is this occurring and what does it mean?”
Mike Walden:
“For many, this has really been the missing piece of the economic recovery. We have had a comeback of jobs. We have had the unemployment rate going down, but we’ve not had wage growth. And finally, in 2016 it looks like we’ve had that. If you look at wage rates nationally, after you take out inflation, they’re going up at about four percent. Actually, if you look here at North Carolina it’s slightly faster.”
“And many economists think this is due to the improving job market. As you hire more people, and you reduce the number of those who are unemployed, we say the job market tightens. That means that someone trying to hire a new worker, or maybe hire a worker who’s already working from another company, they’re probably going to have to offer a little better pay. So we are seeing that reflected in the faster growth of wages.”
“Now another factor here is low inflation. You notice I said that these increases are after we take out inflation. Inflation has been very, very low in 2016. It looks like it’s going to come around, come in at about 1.2 percent. So that’s also helping people who get pay raises once you adjust for inflation still see something left over. So this is a very, very good piece of the economic outlook; the fact that we’re beginning to see wage growth go up at a faster rate.”
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