Wednesday, August 4

Wages are growing, but people who have stayed in the same job for the last year aren’t getting raises


Wages have climbed amid the pandemic, especially in the hard-hit leisure and hospitality industry as some employers boost pay to help fill positions. However, wages really haven’t grown that much for employees already in the workforce.

Overall, wages have grown during the pandemic, even reporting the fastest rate on one measure since 1983 per Insider’s analysis.

But despite an increase in pay, current workers aren’t seeing that much of a change, based on Atlanta Fed data.

The Atlanta Fed wage tracker uses Current Population Survey data to look at changes in hourly earnings of workers. The tracker differs from the average hourly earnings reported each month by the Bureau of Labor Statistics because the data used by the Atlanta Fed controls for the composition of the workforce and looks at specific workers, while the average hourly earnings looks at pay across the workforce.

This can be seen in the following chart, although it’s important to note that the two lines show slightly different things. Year-over-year changes for average hourly earnings have fluctuated after a large spike in wage growth in April 2020 when lot of low-wage workers’ jobs were cut. The wages used in the Atlanta Fed wage tracker has been more steady throughout the pandemic and even dropped slightly recently.

“The Atlanta Fed measure is showing that while in general in this measure of wages that controls for composition bias, wage growth is actually lower if you look economy-wide than it was before the

recession
hit,” Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, told Insider.

That is, for “people who’ve remained employed, their wages are growing more slowly than they were before the recession,” Shierholz said.

The Atlanta Fed data allows people to look at how wages have changed for employees at a time where there’s been massive job losses and quits during the pandemic and during economic recovery. The Economic Policy Institute’s Shierholz and Josh Bivens wrote in a recent analysis using this data that “overall wage growth fell in the first 15 months of the COVID-19 recession, largely in line with trends in the previous two recessions.”

Wage growth in leisure and hospitality won’t last unless there are permanent changes

Shierholz told Insider that labor shortages and strong wage growth are really just in select industries right now, such as leisure and hospitality. This industry has been especially affected by the pandemic and is slowly making employment gains back to pre-pandemic levels.

The leisure and hospitality industry gained 343,000 jobs in June, marking five consecutive month of gains as it slowly makes its way back to its pre-pandemic level of over 16.9 million.

The industry hasn’t only seen large employment gains but large wage increases. Hourly wages were $18.23 for this industry in June, 7.1% higher than wages a year earlier. However, wages in this sector were low in June 2020 after wages appeared to increase from March to April 2020 because the sector lost many lower-wage workers amid business closures and lockdowns.

Shierholz said the wage growth we’re seeing in this industry is likely temporary, but there are ways to give workers more permanent “economic leverage.” Two ways, she said, are to pass a $15 minimum wage and the Protecting the Right to Organize Act, or the PRO Act. Democratic Rep. Andy Levin similarly told Politico, as previously reported by Insider, that “[workers are] going to have to regain the freedom to form unions and bargain collectively” for the gains to be “durable.”



www.businessinsider.com

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