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Are More U.S. Workers Beginning To Get Raises?


Many Americans haven't had a raise in years. But the official unemployment rate is at 5 percent, and as it turns out wages are finally taking off. To find out more, we turn as we often do to David Wessel. He's director of the Hutchins Center at the Brookings Institution and a contributing correspondent for The Wall Street Journal. Good morning.

DAVID WESSEL: Good Morning, Renee.

MONTAGNE: Well, talk to us about the signs that American workers are actually starting to get a raise at last.

WESSEL: Well, one of the many economic surprises of the past couple of years has been that the steady decline in the unemployment rate was 10 percent at the height of the recession. Now it's down to 5 percent, has not been increased - accompanied by widespread increase in wages. And that usually happens when unemployment falls.

But lately, the job market has gotten better. There are hints that wages finally are beginning to pick up. Over the past year, hourly earnings have risen about 2 and a half percent. That's a bit faster than the 2 percent we were seeing in the middle of last year.

Surveys of employers turned up more evidence that they're boosting wages and not only for those few people in highly-specialized fields. But the numbers are not completely clear, and people come to different conclusions about the trends. Economists at Goldman Sachs, for instance, see quite compelling evidence that the pace of wage increases is quickening. But the last time Fed Chair Janet Yellen talked about this back in March, she said she didn't yet see what she called a sustained pickup in wages.

MONTAGNE: Which sounds important because that's - sustained would suggest a trend. But 2 and a half percent across the economy uptick in wages, how important is that for the average worker?

WESSEL: Well, it does mean that wages finally are rising faster than the official measures of inflation. On average though, we're talking about not a whole lot of money per person - about $21 a week on average for - given the average wage. And as you said, these are pretty modest increases after a long period of wage stagnation.

I mean, it's hard to believe but if you just look at cash wages, the typical man who worked year-round and full-time earned less in 2004 - adjusted for inflation - then a similar worker did back in 1974. But of course, averages hide the wide and widening differences between the best paid and the worst-paid workers in the U.S. So not everybody has gotten a wage. We're talking about the averages.

MONTAGNE: But we have been having hearing a lot about the minimum wage. A number of municipal and state governments have been increasing their minimum wage. How big of a factor is that in the overall story here?

WESSEL: Well, it's one piece of the story. You're right, the minimum wage has been raised to $15 in some parts of California, $11 in St. Louis. But a lot of these increases are phased in over a number of years. That's the case in New York. We've seen Wal-Mart and Target, which are very big employers, boost their wages. That's because they're obviously having trouble getting people. But if you look at the economy as a whole, this is a significant...

MONTAGNE: All right...

WESSEL: ...but small slice of the workforce. The average worker makes $21.50 so an increase from 10 to 12 bucks won't make much difference to them.

MONTAGNE: OK, thanks very much. David Wessel is director of the Hutchins Center at the Brookings Institution. Transcript provided by NPR, Copyright NPR.