After four years in which pay failed to keep pace with price
increases, wages for most American workers have begun rising
significantly faster than inflation.
With energy prices
now sharply lower than a few months ago and the improving job market
forcing employers to offer higher raises, the buying power of American
workers is now rising at the fastest rate since the economic boom of
the late 1990s.
The average hourly wage for workers below
management level – everyone from school bus drivers to stockbrokers –
rose 2.8 percent from October 2005 to October of this year, after being
adjusted for inflation, according to the Bureau of Labor Statistics. Only a year ago, it was falling by 1.5 percent.
Productivity has been rising for years, so it is comforting to see wages follow suit. Every now and then the predictions of economic theory are correct.