In a recent column, Rich argues that President Trump should talk more about wage growth and less about the stock market. The good news for workers is that this advice will likely be as correct in 2019 as it has been in 2018.
Wages are growing. The most recent data on wages (more specifically, average hourly earnings) finds that they are up over 3 percent relative to one year prior. And the pace of wage growth accelerated throughout 2018. The early months of 2018 saw wages growing at about 2.6 percent, noticeably slower than the 3+ percent growth workers have recently enjoyed.
I expect wages to continue to grow in 2019. The economy will likely continue to add jobs at a rate faster than is needed to absorb the growth of the working-age population (around 100,000 jobs per month), which will push the unemployment rate even lower than its current, remarkably low 3.7 percent.
As the labor market continues to tighten, the bargaining power of workers will continue to increase. Firms will have to increase their wage offerings in order to attract new workers and retain existing workers.
Wage growth has been faster for lower-wage workers than for higher-wage workers. I expect this pattern to continue in 2019 as well, since lower-paid workers are most sensitive to the amount of slack in the labor market.
I’ll end on this happy note, and wish all NR readers a happy new year.