Tightening Labor Market Will at Some Point Strengthen Wage Growth, but No Sign of That Today

The weak labor market of the last seven years has put enormous downward pressure on wages. Employers just don’t have to offer big wage increases to get and keep the workers they need when their workers don’t have anywhere else to go. As the labor market continues to tighten, at some point wage growth will accelerate and workers will see real wage growth, which will be a very good thing. But as the figure shows, there is no sign of that yet in today’s jobs report.

Jobs_nominal hourly earnings of all and production.xlsx