Tags: working class | wages | income | jobs | Aetna | Wal-Mart

Economists: Wages to Start Rising as Job Market Tightens

By    |   Thursday, 22 Jan 2015 02:05 PM

In his State of the Union message, President Barack Obama proudly proclaimed the strength of America's recovery from the recession of 2008. Unemployment is plunging, corporate profits soaring, the stock market climbing — but what about wages?

While unemployment fell to 5.6 percent in December from 5.8 percent in November, according to the Labor Department, The Wall Street Journal reports that the increase in average hourly wages fell slightly for that period, bringing a 2014 increase of just 1.7 percent.

However, The New York Times said that, thanks to the immutable economic law of supply and demand, there are several indicators that wages will be on the increase in the coming year.

The Times reports that because of the drop in unemployment, businesses actually are beginning to find it harder to hire quality workers. While employers had a dramatically high number of 4.97 million job openings in November, an increase of 142,000 from October, they actually hired 4.99 million new workers, further decreasing the labor pool.

"Employers are saying they have a lot more openings, but seem to be having trouble filling those jobs as quickly as historical patterns would suggest.

"That suggests they will have to make those jobs more attractive to fill those openings more rapidly, either with higher pay, improved benefits, better working conditions or a combination of these," the Times states.

The National Federation of Business reported that in a survey, 54 percent of employers "reported hiring or trying to hire, but 43 percent reported few or no qualified applicants for the positions they were trying to fill."

The organization noted that "24 percent reported raising compensation, yielding a seasonally adjusted net 25 percent reporting higher compensation, up four points. The reported gains in compensation are still in the range typical of an economy with reasonable growth, and labor market conditions are suggestive of a tightening, which will put further upward pressure on compensation along with government regulations."

Several firms already are reporting increases in wages, with insurance giant Aetna announcing a raise in minimum hourly pay to $16 for about 5,700 workers, in a move to retain quality employees, the Journal reported.

Other firms, such as Wal-Mart, Container Store, Starbucks and Gap, also are planning to increase minimum wages.

A PNC Bank fall survey found that two out of five small- and mid-size businesses plan to increase wages in the next six months, The Chicago Tribune reported.

PNC economist Mekael Teshome told the Tribune, "I would expect business owners to be even more upbeat about pay raises in our upcoming spring survey, given that the economic backdrop has improved even further since our fall survey."

Torsten Slok, Deutsche Bank economist, told the Journal, "We are getting closer and closer to the inflection point where we will see broad wage pressure. We are getting to the stage where companies can no longer find the right workers."

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In his State of the Union message, President Barack Obama proudly proclaimed the strength of America's recovery from the recession of 2008. Unemployment is plunging, corporate profits soaring, the stock market climbing — but what about wages?
working class, wages, income, jobs, Aetna, Wal-Mart
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2015-05-22
Thursday, 22 Jan 2015 02:05 PM
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