By most reports, the U.S. Economy is in better shape than it’s been in a long while. Although employers only added 126,000 jobs in March (far below the 295,000 added in February), we’ve seen an average of 269,000 jobs per month over the past year, according to the Bureau of Labor Statistics (BLS).
Responses from PayScale’s 2015 Compensation Best Practices Report (CBPR) are in line with BLS reports. When asked, “What is the expectation for your company’s financial performance in 2015?” 73 percent of respondents said they expected financial performance would improve, and only 5 percent expected it would weaken. In addition, 55 percent of employers said their companies had grown since January 2014.
And yet, many workers are still waiting for employers to “show them the money!” Last month, the BLS reported that real average hourly earnings for all employees decreased 0.1 percent from January to February. And according to The PayScale Real Wage Index, U.S. wages are down 6.5 percent since 2006. (The PayScale Real Wage Index tracks the buying power of wages for full-time private industry workers in the U.S.)
Still more workers than jobs…
Perhaps part of the reason for the slow increase in wages can be explained by the simple law of supply and demand.
At the end of February, there were 5.1 million job openings in the U.S., and 8.7 million unemployed people. In other words, for every job opening, there were generally 1.7 job seekers. That said, according to the experts, this ratio more or less mirrors the pre-recession ratio. So, what might be some other explanations?
Other possible reasons for persistent stagnant wages
Possible reasons for stagnant wages include:
- Employers are still feeling antsy. It could be that many employers simply aren’t feeling enough confidence in the economy to open their coffers.
- Employers don’t believe their labor demands warrant higher wages. Even as employers bemoan the skills gap and its impact on their ability to find good workers, perhaps they aren’t fully convinced higher wages will solve the problem?
- Something fundamentally wrong in the U.S. economic structure is preventing the growth of wages for low- and middle-income Americans. In “2015 Will Be the True Test of the Economic Recovery,” author Ben Casselman says there’s cause for optimism about the economy but also cause for concern. He writes, “Not since the late 1990s has the U.S. economy managed to generate strong income gains for the American middle class, let alone those at the bottom of the earnings totem pole.”
Meanwhile, the national “quit rate” (i.e., percent of voluntary separations) has jumped 17 percent in the past 12 months, indicating that more and more Americans aren’t content to continue waiting for their current employers to pony up the cash.
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…in 2015?” 73 percent of respondents said they expected financial performance would improve, and only 5 percent expected it would weaken.
The key word is EXPECTED. Ask them now how they have actually done, and more than half will probably state it has weakened, especially
I really appreciate the information.. I just wish the company owners would appreciate it as much as I do,.
Antsy is right – we are seeing more and more downward pressure on pricing, so while volume may be looking more positive, it is not reflected in revenue and therefore does not translate into wage increases.
the national “quit rate” (i.e., percent of voluntary separations) has jumped 17 percent in the past 12 months,
What has it jumped to? I have not seen this number before. Thank you for an interesting article.
There is no skills gap. There are plenty of Americans to fill these jobs. Employers just don’t want to pay market rate are and importing cheap labor under H1B programs to drive down wages. Coupled with illegal immigration, the reason for real wage declines is obvious. Employers and government are perpetrating one of the greatest frauds in history against the American people. Developing cadres of unemployed/unemployable youth dependent on the state in order to protect an ultimately unsustainable liberal political elite will eventually result in civil war. We are already seeing the start of this in places like Ferguson, Detroit… Read more »
The increase in “quit rate” is an indication that more people are feeling more confident in their ability to land another job – that’s a good thing. If you are looking for a new job, it is always better to be currently employed. As for falling wages, the article states “…according to The PayScale Real Wage Index, U.S. wages are down 6.5 percent since 2006. (The PayScale Real Wage Index tracks the BUYING POWER OF WAGES for full-time private industry workers in the U.S.) This is not a measure of actual wages, but the buying power of those wages –… Read more »
Stem graduate. Get your facts correct before you post. H1B visa recipients are paid market wage AND they exist because that skill set is in very short supply or nonexistent here. That is the basis of H1B, we have to prove there is a need and no supply.
That’s funny, STEMGraduate. 1. H1B isn’t cheap – it requires a $5-$10k legal fee for the company to get one. 2. H1B requires the company to ADVERTISE the position open before they can apply for it – in other words, show some form of initiative to recruit locals before they give the position to a foreign worker. 3. In the H1B application, the employer has to write a testimony clearly showing they are paying market rate and that the job the applicant will be doing while they are in USA. 4. In fact, the process to get a H1B is… Read more »
I would like a copy of the report and also where to find the “quit rate” Thanks. Great article.
To HRGuy and Jamie – You are correct in the requirements but you also assume that everyone follows the rules. Sorry but my post is factual. I have first hand knowledge of an org that advertised over a holiday for less than the required time, replaced existing higher paid US workers with lower paid H1Bs and saved much more that than the $5 – 10 K cost. There was no “need” and “market” has such a wide range as to be meaningless. (What’s the market value of your car?….it depends) Companies don’t care about market, they just want to cut… Read more »
Update Jamie and HRGuy – Check out today’s article by Patrick Thibodeaux in Computerworld about H1B misuse by Disney and Southern California Edison. I’m not the only one noticing this. Note to Jamie: It’s not funny any more, is it. These are serious abuses by major corporations. Most major employers have figured out a way to game the system and net costs are minimal. There are even brokers in India who will provide H1Bs at no cost to the employer and get a kickback from the poor H1B of part of their salary. You’re naive view of the world is… Read more »
I also would like a copy of the report.
Hey everyone! Thanks for taking the time to comment.
Please follow this link http://www.payscale.com/cbpr?src=hp_2_cbpr to receive your FREE copy of PayScale’s 2015 Compensation Best Practices Report and also know that we place a hyperlink at the bottom of every article that references the data.
Also, for more information about the national quit rate, monitored by the Bureau of Labor Statistics, please follow THIS link http://www.bls.gov/news.release/jolts.t04.htm.
Cheers!