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Stagnant Wages Are Crimping Economic Growth

Wall Street Journal (08/25/13) Neil Shah

U.S. workers’ pay is not keeping up with inflation. According to data from the U.S. Department of Labor, the average hourly pay for nongovernment, nonsupervisory workers—adjusted for price increases—declined to $8.77 last month from $8.85 in June 2009. Stagnant wages make it more difficult for workers to purchase consumer items, which drive the nation’s economic growth. Economists blame stagnant wages on a slow economic growth rate, companies’ refusal to increase wages, and the pressures of global competition.

Workers do not feel confident they can demand higher wages, and do not feel confident they can leave their jobs to find better work. In the short term, real wages are expected to grow by 1% by the end of 2014. In the long term, median income is expected to drop over the next two decades as the American population ages.