The July jobs report from the U.S. Bureau of Labor Statistics brought welcome news on wage growth: Median weekly earnings rose 4.2 percent on an annual basis, the fastest pace seen since 2007. But the underlying story may be different from what the headline number suggests, according to a new report from the San Francisco Fed.
Wage growth for continuously full-time employed workers has been rising and is currently in line with rates seen at the previous economic peak in 2007. But aggregate wage growth continues to be held down by the entry of new and returning workers to full-time employment, who generally earn less than workers who already have full-time employment. And the turnover is in large part due to retiring baby boomers.
Sluggish wage growth, then, is less a condition of the labor market than it is due to demographics. Low wage growth is due in part to the large-scale exit of higher-paid baby boomers from the labor force. With so many of this generation still approaching retirement, the so-called Silver Tsunami will continue to be a drag on wage growth for some time.
No comments:
Post a Comment