Even though the May jobs report was solid, workers still aren’t seeing their paychecks grow, the Wall Street Journal reports: “The unemployment rate here and in other thriving metropolitan regions across the U.S. is below where it was when the financial crisis blew a hole in the U.S. economy in 2008. Now, many American workers are asking: Where’s my raise?”
The Journal looked at 33 U.S. areas of varying sizes where unemployment rates had returned to prerecession levels. In two-thirds of these cities, wage growth still trailed the prerecession pace.
Meanwhile, nationally, average hourly wages have remained stuck at a 2% pace, barely surpassing the rate of inflation.
Seems a little different from the picture the Obama administration painted in selling their economic plans. In 2010, the administration launched the first “recovery summer” campaign to focus on the better jobs and higher wages their trillion-dollar stimulus plan would allegedly create. Yet as we are about to enter recovery summer number six, very few are feeling this so-called recovery. So what exactly is going on?
One big reason: Companies just don’t have the incentive to offer pay raises, nor do employees have the leverage to ask for them. As the Journal explained, in an economy where full-time employment remains tough to secure, “A pay raise is a luxury far less important than finding a job.”
Unfortunately, this trend may continue. John Williams, president of the Federal Reserve Bank of San Francisco, forecasts that annual wage increases will drop even more in the near future, resulting in smaller paychecks for workers to take home to their families.
All these disappointments make it quite clear: The American economy is not performing anywhere near its potential. There’s plenty of room for growth, and it’s time to pass real reforms that will create jobs and expand opportunity.