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- The Economics and Emotions Behind Slow Wage Growth
We should also admit the possibility that there is no problem to solve, no mystery to explain a that wages are growing in line with the economya s overall performance. Moodya s Analytics economist Adam OzimekA findsA that when you measure slack using the employment rate rather than the unemployment rate, wages are growing at a pace you would expect.Or consider a simpler calculation: Roughly speaking, wages grow if workers are more productive and if overall prices are increasing. Productivity growth has been lower this cycle than in the past, and based on its performance wage growth is only slightly slower than youa d expect.These are compelling arguments, but Ia m not sold. Wage growth is slower than wea d expect, and the reason is something of a mystery. Some combination of all the factors wea ve discussed is probably the culprit. This is good news, because it means that a healthy rate of wage growth is likely in the future. But leta s hope the future arrives sooner rather than later.