Friday, 1 September 2017

Is there a wage growth puzzle in America?

TODAY’S labour market report showed that the American economy created 156,000 net new jobs in August. That was a bit less than expected, but payrolls are still growing comfortably faster than the working-age population. Despite having created over 2m jobs in the last year, pushing unemployment below 4.5% for the last five months, wage growth remains muted, at around 2.5%, compared to more like 3.5% the last time unemployment was comparably low. In a recent article for the print edition, I anlysed one potential explanation for weak wage growth: retirements of high-earnings baby-boomers.

Scott Sumner has taken issue with the premise of my piece. He...Continue reading

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