Everything Is Booming Except for Americans' Wages

Broad measures of unemployment are as low as at the peak of the mid-2000s boom. And job creation continues at a healthy clip. In other words, it’s time to stop calling this a recovery, and start calling it a boom. But one important economic indicator remains disturbingly subdued -- wages.In dollar terms, wage growth has been superficially healthy -- in January, average hourly earnings rose 2.9% from a year earlier. But consumer prices increased 2.1% during the same period. In other words, real hourly earnings grew by only 0.8% -- less than half the real growth rate of the overall economy.Meanwhile, the NFIB survey reports that 31% of employers are paying their workers more. But this is also presumably unadjusted for inflation. Because inflation is positive in most years, wages tend to go up on average every year. But that doesn’t mean workers are actually getting more purchasing power. In terms of real wage growth, 2017 wasn't a great year, and for nonsupervisory workers, it was especially slow. The biggest wage gains since the recession came in 2015, thanks to a fall in oil prices that held inflation down while dollar wages rose. Now, inflation is back to a more normal level, but dollar wages aren’t rising much faster, meaning that workers are pocketing fewer gains. Median real weekly earnings for American workers actually fell in late 2017 after hitting a plateau earlier in the year. Why are low unemployment, robust business investment and soaring confidence measures not causing faster real wage growth? One possible reason is that employers are growing increasingly powerful. Recent research has found that rising concentration in labor markets -- a decrease in the number of employers competing for workers -- has led to the suppression of wages.