Average hourly earnings in February rose by a meager 3 cents to $24.78, the Labor Department said Friday. That’s up only 2% over the past year, well below the more typical 3% pace seen before the recession.
Higher wages would likely lead to more consumer spending and faster economic growth. They also could underpin inflation, which has been anemic.
With employers hiring at a solid pace and unemployment falling, some economists think wages should eventually start to rise.
“Faster wage growth has been the missing piece of the labor-market puzzle, and here the February jobs report was a step back, but wage growth should accelerate as the job market continues to tighten,” Gus Faucher, senior economist at PNC Financial Services, said in a note to clients.
Indeed, some wage pressure appears to be emerging at the low end of the wage scale–at restaurants, for example.
But not all economists think wages are out of whack. Productivity, for one, might have to rise for workers to start demanding better pay. Nonfarm labor productivity decreased at a 2.2% annual rate during the fourth quarter of 2014.
“Given the poor progress of labor productivity in recent years, averaging around just 1% per year, and stubbornly low inflation, the current rate of wage growth actually looks in line with fundamentals,” John Silvia, chief economist at Wells Fargo, said in a note to clients.
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