- Wages have gone up across the board between 2016 and 2017 but some workers are merely catching up, according to a new report by the Economic Policy Institute (EPI). The study found that increases were uneven across racial, gender and other demographic lines and that the wage gap between high- and low-wage-earners is widening.
- Wage increases have been sluggish overall since 2000, despite high productivity and a growing economy, the report notes. EPI researchers conclude that if wages had risen with productivity increases, as they had in the four decades following World War II, an American earning $40,000 annually today would be earning about $61,000 annually.
- Unemployment has dropped significantly below recession levels, according to the report, but not low enough for economists to say that the U.S. has reached full employment. Pay increases still correlate with educations levels, and EPI notes that wage growth has been solid among low-income workers in states that have enacted minimum-wage increases.
The unemployment rate — currently 4.1% according to the U.S. Bureau of Labor Statistics — is at a record low, but it might not indicate full employment. Employers will have to observe policy changes, inflation and rising interest rates in order to gauge the overall trajectory of the economy.
It's common parlance in business that wages are "sticky," even when other indicators of economic health improve. Across the board, wages aren't expected to rise much in 2018, though one-time bonuses and other forms of compensation (like 401k contributions and leave benefits) are increasingly being offered by large employers. A number of employers have made big, public proposals of wage increases and bonuses following passage of the Congressional tax law late last year.
Ballooning inequality will continue to be a problem for the forseeable future, and a lack of minority presence in executive and upper-level positions will continue to translate into lower wages and employment mobility for members of these groups. HR should be aware of worker discontent in response to these gaps.
Meanwhile, employers shouldn't hesitate to make changes that will keep them competitive, such as focusing on employee engagement, closing race- and gender-based pay gaps, preparing for a digital transformation, building workplace cultures of inclusion and well-being, and filling critical job openings in spite of skills shortages.