7 reasons why your salary might not be going up, even though the economy is doing great
Low unemployment should mean fast wage growth, but we haven't seen that in recent years. Three economists shared their insights with Business Insider as to why pay hasn't gone up much. The leading reason: Companies are prioritizing shareholder interest over their employees.
The US economy is growing at its fastest pace in four years. Unemployment recently sank to an 18-year low. That's all led President Donald Trump to deem America as " target="_blank"the economic envy of the entire world."
But, you wouldn't know that by looking at your pay stub. Wage growth has been "sluggish," as Business Insider's Rich Feloni recently reported.
Even our nation's top economists are baffled. Such low unemployment should mean that employers are kicking up pay in order to lure in workers. Yet, they're not.
There's no single reason for why wage growth has been dismal. Business Insider spoke to three economists to shed light on their theories on the conundrum: Jake Rosenfeld of the University of Washington in St. Louis, Economic Policy Institute senior economist Heidi Shierholz, and Brookings Institution senior fellow Jay Shambaugh.
Here's what they shared:
Productivity gains have been minimal
Growth in productivity, which is the output we get from every hour of work, has been declining in the US, as well as across advanced economies globally.
Companies are increasing their spending on benefits
Wage and salary costs have grown 5.3% costs since 2001, adjusted for inflation, while benefit costs are up 22.5%.
Corporations are directing more of their money to shareholders and executives, not everyday workers
Tons of low-wage workers are finally re-entering the workforce
But that doesn't explain why wage growth has been low in the long-run.
Unemployment isn't as low as we think it is
Membership in unions has declined, which means fewer wage gains to those both in and out of unions
Non-managerial construction, transportation, and manufacturing workers were most likely to be unionized, said Rosenfeld.
Shareholders don't want companies to raise wages
In summary, economists say workers have lost much of their power
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