Existent for sure: Wage Growth Even Better Than Reported | San Francisco Fed
Just masked by ~10k boomers retiring each day, replaced by new, lower-paid entrants to the workforce. Replaced and then some, given that we have about 4-5k new workers (net) per day over the past year.
All too often articles now draw a conclusion in opposition to the facts they present. Yes, there is growth for the people who may seem to need it the least, those in long term well paying jobs, but that is the mask, those are the people who will be retiring. And they are not seeing wage growth in the traditional manner by using the ability to change jobs as a bargaining chip, instead any job change, voluntary or not usually leads to lower compensation. And there are more restrictions on employees changing jobs than ever before as more and more people are locked into non-compete restrictions and consolidation reduces the alternatives.
In the end, wage growth is down and is not currently showing signs of increasing in the future. But that is just rght now, I do believe this situation is coming to a head and companies will have to stop shifting all their profits back to shareholders in order to keep the kind of work force they need. But that will all start with a significantly lowered wage level to start with. And assumes we don’t face another economic crisis first.
The seasonally adjusted nonfarm quit rate in May was the highest it’s been since 2001 (BLS JTSQUR). The economic doom-and-gloom message was wrong when it helped get Trump get elected and it’s still wrong. Although he seems to be trying his best to make it come true.
If Grandma and Grandpa retire, Mom and Dad get raises, and all three kids get their first jobs, the correct conclusion is not that “wage growth is down” unless you have corrected for demographic changes that include a 3 for 2 replacement of experienced workers with noobs. More people have jobs than ever before, and the people who already had them are, on average, getting paid more. For now. China just announced more tariffs.
The quit rate is highly influenced by retirement, which is a growing economic factor, I’m sure in part spurred by long period of economic growth that had been keeping older workers hesitant to retire. But people continue to age and the Baby Boomer retirements can’t wait forever.
New hires are the ones raising the employment volume, that’s why wage growth is down, and it doesn’t matter if people keep getting annual raises even if they match the inflation rate because total economic growth continues to rise without being reflected in wages. It’s not a gloom and doom scenario, it’s a basic inequity in the system that is indicative of reduced competition through consolidation and regulation. Maybe if the majority of people are doing well the wage gap won’t matter but I doubt it will survive an economic downturn.
The quit rate is largely a function of people quitting one job for another, not to retire. 10k boomers may retire each day, but 3.5 million quit their jobs in May, about 115k per day. A high quit rate is a sign of * optimism.*
Not necessarily optimism about earning higher wages long term though. It certainly indicates a high employment rate.
I’m not aware of any BLS datasets that would give us a sense of long- vs short-term optimism. I can tell you that my own feelings about the current administration’s abilities to continue the long-term trends that began under the last administration are less than optimistic. The tragectory is still good though. For now.
We’re pretty much in the same place on this. It’s even possible the current administration’s policies will keep the economy from overheating. Not the best way to do it, but if it keeps over-exuberance from creating bubble it will do.