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U.S. Workers May Finally Catch a Break as Wages Look Set to Rise

Bloomberg (12/21/15) Rich Miller; Steve Matthews

After five years in which annual wage increases have averaged about 2%, economists say salaries are set to pick up as a taut job market prompts more employers to boost pay to retain or add the workers they need. “This will be the first time in a long time—and I’m talking a long time—that workers will see real wage inflation of some magnitude,” says Jonas Prising, chief executive officer of ManpowerGroup. A steady fall in joblessness to a seven-year low of 5% from a 26-year high of 10% in 2009 is seen as the main reason for the anticipated rise in pay.

There are now 1.5 unemployed job seekers for every posted opening, down from a 2009 high of 6.8. Some workers, especially those willing to switch employers, already are reaping the benefits of the tighter labor market. The quits rate, which shows the willingness of employees to leave their jobs, was 1.9% in October, up from 1.3% in 2009 and just marginally below the 2% average of the last expansion. To cope with the tightening labor market, employers are drawing from “talent pools that were previously untapped” by hiring Americans who have been out of work for a while, ManpowerGroup’s Prising said.

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