Why Are Wages Growing Slowly Despite McDonald’s, Wal-Mart Raises? – Real Time Economics

Wal-Mart plans to boost pay for its U.S. employees to at least $10 an hour by next year.

Americans’ paychecks are stuck in a slow-growth pattern despite companies ranging from McDonald’s to Wal-Mart to Starbucks touting raises for their workers.

Average hourly earnings advanced 2.1% from a year earlier, the Labor Department said in Friday’s jobs report. That’s only a slight pickup from February’s reading. Taking the longer view, wages have basically been growing at a 2% clip for the past four years.

How is that possible with all the news of raises and minimum-wage increases in more than a dozen states this year?  Pay raises announced by prominent companies don’t kick in till later this year. But even when they do, they won’t address the deeper challenge: The middle of the labor market is largely missing out.

Low-wage workers are earning more. Leisure and hospitality employees, mainly restaurant workers, saw a 3.6% hourly pay increase over the past year. Nearly half of minimum-wage earners work in food service.

While that’s a decent raise, leisure and hospitality workers only earn an average of $14.23 an hour. Nonmanagers at fast-food restaurants earn less than $10 an hour. That means the raises for restaurant employees and other low-paid workers have limited influence on the overall wage measure.

Higher-skilled workers are also doing well. The utilities and information industries are recording wage growth of closer to 3%. But those fields employ relatively few workers, which also limits their influence on wage growth.

Several big employment sectors are being left out of better pay. Wages in the health care and education field rose less than 2% over the past year. Hourly manufacturing pay is up 1.4%. Many parts of the service sector are growing near the 2.1% overall average.

There is, however, a silver lining. While wage growth has held steady for years, price increases have slowed. Consumer prices are essentially flat from a year earlier, reflecting falling gasoline prices.

That helps free up cash for consumers to spend—or save—even if their paychecks don’t look much different.


Related reading:

Wages Q&A: What Do McDonald’s, Wal-Mart and Target Pay Raises Mean for the Economy?

Jobs Report: U.S. Adds 126,000 Jobs; Unemployment Steady at 5.5%

Interactive Graphic: Job Market Tracker

March Jobs Report By The Numbers

The March Jobs Report in 11 Charts

Economists React to the March Jobs Report: ‘Bottom Line: Ouch’

For Fed, Question of Whether Jobs Weakness Will Continue or Prove an Aberration

A Roadmap to the Fed’s Thinking on the Jobs Report

Oil and Gas Jobs Take a Hit in the March Jobs Report

Kathleen Madigan: Don’t Angst Too Much Over One Weak Jobs Report

5 Signs That Could Calm Fears for the Economy

March Jobs Report: Everything You Need to Know



for economic news and analysis

for central banking news and analysis

Get WSJ economic analysis delivered to your inbox:

Sign up for the WSJ’s Grand Central, a daily report on global central banking

Sign up for the Real Time Economics daily summary

If the article suppose to have a video or a photo gallery and it does not appear on your screen, please Click Here

3 April 2015 | 2:12 pm – Source: blogs.wsj.com


Leave a Reply

Your email address will not be published.