The employment from the Bureau of Labor Statistics released two weeks ago indicated that average hourly earnings are up in the U.S. by two point five percent over the past year. That level of wage growth falls well short of the wage gains experienced during the 1980's, 1990's and mid 2000's.
While there is a conventional wisdom that suggests that wage growth is soft because America is disproportionately adding lower wage, entry level jobs, the fact of the matter is that relatively low wage growth is common across industries as reported by CNNMoney among others. For instance, wages in manufacturing last year grew by only two point five percent.
Wages in financial services also expanded by less than three percent. The same can be said of construction, education and health services. While some might be tempted to shake their heads and express nostalgia for the past, the income growth situation today is a bit better than headline numbers suggest.
While it is true that wages grew more rapidly during the 1970's, there was also considerably more inflation. So while people’s paychecks have been expanding slowly, their inflation adjusted paychecks have been growing at a pace that is more impressive.
