What’s Up with Wage Growth?

Source: Mary C. Daly, Bart Hobijn, and Benjamin Pyle, Federal Reserve Bank of San Francisco, FRBSF Economic Letter, 2016-07, March 7, 2016

While most labor market indicators point to an economy near full employment, a notable exception is the sluggish rise of wages. However, this slow wage growth likely reflects recent cyclical and secular shifts in the composition rather than a weak labor market. In particular, while higher-wage baby boomers have been retiring, lower-wage workers sidelined during the recession have been taking new full-time jobs. Together these two changes have held down measures of wage growth…