What to Watch on Jobs Day: Will we see signs of stronger wage growth?

Friday is the last Bureau of Labor Statistics (BLS) Jobs Report before the final meeting of the year for the Federal Open Market Committee (FOMC) meeting. The FOMC has a dual mandate to pursue both maximum employment as well as stable inflation around their 2 percent target. Current forecasts signal that it’s more likely than not that the FOMC will raise interest rates in their December meeting, on pace with their behavior this year so far. However, the data, should give them pause to hold off and let the economy continue to recover—and the data they should really be paying attention to comes from the labor market, not the stock market.

While the economy is experiencing continued low unemployment, there’s other evidence to suggest that recent levels of unemployment are overstating the strength of the economy. The share of the population with a job continues to be softer than recent labor market peaks. The figure below shows the share of the 25–54 year old population with a job, removing any issues of a shrinking labor force due to retiring baby boomers. This prime-age employment-to-population ratio most recently came in at 79.7 percent, a huge improvement since the depths of the aftermath of the Great Recession, but still more than 2 percentage points lower than when the economy was closest to full employment back in 2000.

Figure A

Employment-to-population ratio of workers ages 25-54, 1989–2018

date Employment to population ratio
Jan-1989 80%
Feb-1989 79.9
Mar-1989 79.9
Apr-1989 79.8
May-1989 79.8
Jun-1989 79.8
Jul-1989 79.8
Aug-1989 79.9
Sep-1989 80
Oct-1989 79.9
Nov-1989 80.2
Dec-1989 80.1
Jan-1990 80.2
Feb-1990 80.2
Mar-1990 80.1
Apr-1990 79.9
May-1990 79.9
Jun-1990 79.8
Jul-1990 79.6
Aug-1990 79.5
Sep-1990 79.4
Oct-1990 79.4
Nov-1990 79.2
Dec-1990 79
Jan-1991 78.9
Feb-1991 78.9
Mar-1991 78.7
Apr-1991 79
May-1991 78.6
Jun-1991 78.7
Jul-1991 78.6
Aug-1991 78.5
Sep-1991 78.6
Oct-1991 78.5
Nov-1991 78.4
Dec-1991 78.3
Jan-1992 78.4
Feb-1992 78.2
Mar-1992 78.2
Apr-1992 78.4
May-1992 78.4
Jun-1992 78.5
Jul-1992 78.4
Aug-1992 78.4
Sep-1992 78.3
Oct-1992 78.2
Nov-1992 78.2
Dec-1992 78.2
Jan-1993 78.2
Feb-1993 78.1
Mar-1993 78.2
Apr-1993 78.2
May-1993 78.5
Jun-1993 78.6
Jul-1993 78.6
Aug-1993 78.8
Sep-1993 78.6
Oct-1993 78.7
Nov-1993 79
Dec-1993 79
Jan-1994 78.9
Feb-1994 78.9
Mar-1994 78.9
Apr-1994 79
May-1994 79.2
Jun-1994 78.8
Jul-1994 79.1
Aug-1994 79.2
Sep-1994 79.6
Oct-1994 79.6
Nov-1994 79.8
Dec-1994 79.8
Jan-1995 79.7
Feb-1995 80
Mar-1995 79.9
Apr-1995 79.8
May-1995 79.7
Jun-1995 79.5
Jul-1995 79.7
Aug-1995 79.6
Sep-1995 79.8
Oct-1995 79.8
Nov-1995 79.7
Dec-1995 79.7
Jan-1996 79.8
Feb-1996 79.9
Mar-1996 79.9
Apr-1996 79.9
May-1996 80
Jun-1996 80.1
Jul-1996 80.4
Aug-1996 80.5
Sep-1996 80.4
Oct-1996 80.6
Nov-1996 80.5
Dec-1996 80.5
Jan-1997 80.5
Feb-1997 80.4
Mar-1997 80.6
Apr-1997 80.7
May-1997 80.6
Jun-1997 80.9
Jul-1997 81.1
Aug-1997 81.3
Sep-1997 81.1
Oct-1997 81.1
Nov-1997 81
Dec-1997 81
Jan-1998 81
Feb-1998 81
Mar-1998 81
Apr-1998 81.1
May-1998 81
Jun-1998 81
Jul-1998 81.1
Aug-1998 81.2
Sep-1998 81.3
Oct-1998 81.1
Nov-1998 81.2
Dec-1998 81.3
Jan-1999 81.8
Feb-1999 81.5
Mar-1999 81.3
Apr-1999 81.3
May-1999 81.4
Jun-1999 81.4
Jul-1999 81.2
Aug-1999 81.3
Sep-1999 81.3
Oct-1999 81.5
Nov-1999 81.6
Dec-1999 81.5
Jan-2000 81.8
Feb-2000 81.8
Mar-2000 81.7
Apr-2000 81.9 
May-2000 81.5
Jun-2000 81.5
Jul-2000 81.3
Aug-2000 81.1
Sep-2000 81.1
Oct-2000 81.1
Nov-2000 81.3
Dec-2000 81.4
Jan-2001 81.4
Feb-2001 81.3
Mar-2001 81.3
Apr-2001 80.9
May-2001 80.8
Jun-2001 80.6
Jul-2001 80.5
Aug-2001 80.2
Sep-2001 80.2
Oct-2001 79.9
Nov-2001 79.7
Dec-2001 79.8
Jan-2002 79.6
Feb-2002 79.8
Mar-2002 79.6
Apr-2002 79.5
May-2002 79.4
Jun-2002 79.2
Jul-2002 79.1
Aug-2002 79.3
Sep-2002 79.4
Oct-2002 79.2
Nov-2002 78.8
Dec-2002 79
Jan-2003 78.9
Feb-2003 78.9
Mar-2003 79
Apr-2003 79.1
May-2003 78.9
Jun-2003 78.9
Jul-2003 78.8
Aug-2003 78.7
Sep-2003 78.6 
Oct-2003 78.6
Nov-2003 78.7
Dec-2003 78.8
Jan-2004 78.9
Feb-2004 78.8
Mar-2004 78.7
Apr-2004 78.9
May-2004 79
Jun-2004 79.1
Jul-2004 79.2
Aug-2004 79
Sep-2004 79
Oct-2004 79
Nov-2004 79.1
Dec-2004 78.9
Jan-2005 79.2
Feb-2005 79.2
Mar-2005 79.2
Apr-2005 79.4
May-2005 79.5
Jun-2005 79.2
Jul-2005 79.4
Aug-2005 79.6
Sep-2005 79.4
Oct-2005 79.3
Nov-2005 79.2
Dec-2005 79.3
Jan-2006 79.6
Feb-2006 79.7
Mar-2006 79.8
Apr-2006 79.6
May-2006 79.7
Jun-2006 79.8
Jul-2006 79.8
Aug-2006 79.8
Sep-2006 79.9
Oct-2006 80.1
Nov-2006 80
Dec-2006 80.1
Jan-2007 80.3 
Feb-2007 80.1
Mar-2007 80.2
Apr-2007 80
May-2007 80
Jun-2007 79.9
Jul-2007 79.8
Aug-2007 79.8
Sep-2007 79.7
Oct-2007 79.6
Nov-2007 79.7
Dec-2007 79.7
Jan-2008 80
Feb-2008 79.9
Mar-2008 79.8
Apr-2008 79.6
May-2008 79.5
Jun-2008 79.4
Jul-2008 79.2
Aug-2008 78.8
Sep-2008 78.8
Oct-2008 78.4
Nov-2008 78.1
Dec-2008 77.6
Jan-2009 77
Feb-2009 76.7
Mar-2009 76.2
Apr-2009 76.2
May-2009 75.9
Jun-2009 75.9
Jul-2009 75.8
Aug-2009 75.6
Sep-2009 75.1
Oct-2009 75
Nov-2009 75.2
Dec-2009 74.8 
Jan-2010 75.1
Feb-2010 75.1
Mar-2010 75.1
Apr-2010 75.4
May-2010 75.1
Jun-2010 75.2
Jul-2010 75.1
Aug-2010 75
Sep-2010 75.1
Oct-2010 75
Nov-2010 74.8 
Dec-2010 75
Jan-2011 75.2
Feb-2011 75.1
Mar-2011 75.3
Apr-2011 75.1
May-2011 75.2
Jun-2011 75
Jul-2011 75
Aug-2011 75.1
Sep-2011 74.9
Oct-2011 74.9
Nov-2011 75.3
Dec-2011 75.4
Jan-2012 75.5
Feb-2012 75.5
Mar-2012 75.7
Apr-2012 75.7
May-2012 75.7
Jun-2012 75.6
Jul-2012 75.6
Aug-2012 75.7
Sep-2012 76
Oct-2012 76.1
Nov-2012 75.8
Dec-2012 76
Jan-2013 75.6
Feb-2013 75.8
Mar-2013 75.8
Apr-2013 75.8
May-2013 76
Jun-2013 75.9
Jul-2013 76
Aug-2013 76
Sep-2013 76
Oct-2013 75.6
Nov-2013 76.1
Dec-2013 76.1
Jan-2014 76.4
Feb-2014 76.4
Mar-2014 76.5
Apr-2014 76.5
May-2014 76.4
Jun-2014 76.9
Jul-2014 76.7
Aug-2014 76.9
Sep-2014 76.8
Oct-2014 76.9
Nov-2014 76.9
Dec-2014 77.1
Jan-2015 77.1
Feb-2015 77.2
Mar-2015 77.1
Apr-2015 77.2
May-2015 77.2
Jun-2015 77.4
Jul-2015 77.1
Aug-2015 77.3
Sep-2015 77.2
Oct-2015 77.3
Nov-2015 77.4
Dec-2015 77.4
Jan-2016 77.7
Feb-2016 77.8
Mar-2016 77.9
Apr-2016 77.7
May-2016 77.8
Jun-2016 77.9
Jul-2016 77.9
Aug-2016 77.9
Sep-2016 78
Oct-2016 78.2
Nov-2016 78.1
Dec-2016 78.1
Jan-2017 78.2
Feb-2017 78.3
Mar-2017 78.5
Apr-2017 78.6
May-2017 78.4
Jun-2017 78.6
Jul-2017 78.6
Aug-2017 78.5
Sep-2017 78.9
Oct-2017 78.9
Nov-2017 79
Dec-2017 79.1
Jan-2018 79
Feb-2018 79.3
Mar-2018 79.2
Apr-2018 79.2
May-2018 79.2
Jun-2018 79.3
Jul-2018 79.5
Aug-2018 79.4
Sep-2018 79.3
Oct-2018 79.7
Nov-2018 79.7
Dec-2018 79.7 
ChartData Download data

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Source: EPI analysis of Bureau of Labor Statistics' Current Population Survey public data

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As the economy continued to improve, not only did unemployment fall precipitously, but the share of workers (re)entering the labor force continued to rise. As it turns out (and what we’ve long argued), workers have not been permanently sidelined from the Great Recession, but have systematically been returning to the labor market in search of opportunities. Over the last few years, the newly employed have been coming both from the ranks of the unemployed as well as from outside the labor force, those who were not actively seeking work the month prior to finding a job. In fact, the share of newly employed workers who did not look for work the previous month is at a historic high. Over 7-in-10 newly employed workers are coming from out of the labor force. Clearly, these sidelined workers wanted jobs, yet another indication that the unemployment rate is understating the extent of slack or job searchers compared to previous periods.

Figure B

Share of newly employed workers who said that they were not actively searching for work in the previous month

Share of newly employed workers who said that they were not actively searching for work in the previous month
Apr-1990 61.9%
May-1990 62.6%
Jun-1990 62.0%
Jul-1990 62.0%
Aug-1990 61.6%
Sep-1990 62.3%
Oct-1990 61.0%
Nov-1990 61.2%
Dec-1990 60.4%
Jan-1991 59.9%
Feb-1991 59.0%
Mar-1991 58.5%
Apr-1991 57.7%
May-1991 57.6%
Jun-1991 57.2%
Jul-1991 58.0%
Aug-1991 57.8%
Sep-1991 57.7%
Oct-1991 57.3%
Nov-1991 56.9%
Dec-1991 57.0%
Jan-1992 56.8%
Feb-1992 57.1%
Mar-1992 57.1%
Apr-1992 57.2%
May-1992 57.3%
Jun-1992 56.6%
Jul-1992 56.4%
Aug-1992 56.1%
Sep-1992 55.9%
Oct-1992 55.7%
Nov-1992 55.8%
Dec-1992 56.1%
Jan-1993 56.6%
Feb-1993 57.7%
Mar-1993 58.3%
Apr-1993 58.4%
May-1993 58.2%
Jun-1993 58.1%
Jul-1993 57.5%
Aug-1993 57.5%
Sep-1993 58.0%
Oct-1993 58.9%
Nov-1993 58.5%
Dec-1993 58.3%
Jan-1994 58.8%
Feb-1994 59.2%
Mar-1994 59.1%
Apr-1994 58.7%
May-1994 58.3%
Jun-1994 58.5%
Jul-1994 58.6%
Aug-1994 59.0%
Sep-1994 59.1%
Oct-1994 59.8%
Nov-1994 60.1%
Dec-1994 60.3%
Jan-1995 60.4%
Feb-1995 59.5%
Mar-1995 59.7%
Apr-1995 59.7%
May-1995 59.2%
Jun-1995 59.5%
Jul-1995 59.5%
Aug-1995 60.0%
Sep-1995 60.2%
Oct-1995 59.9%
Nov-1995 60.6%
Dec-1995 59.9%
Jan-1996 59.8%
Feb-1996 60.3%
Mar-1996 60.7%
Apr-1996 61.0%
May-1996 60.7%
Jun-1996 60.8%
Jul-1996 61.5%
Aug-1996 60.8%
Sep-1996 60.9%
Oct-1996 60.2%
Nov-1996 60.6%
Dec-1996 59.6%
Jan-1997 59.1%
Feb-1997 58.9%
Mar-1997 60.3%
Apr-1997 61.4%
May-1997 61.8%
Jun-1997 61.1%
Jul-1997 60.4%
Aug-1997 61.3%
Sep-1997 61.9%
Oct-1997 62.5%
Nov-1997 62.7%
Dec-1997 62.8%
Jan-1998 63.3%
Feb-1998 62.7%
Mar-1998 62.9%
Apr-1998 62.4%
May-1998 63.5%
Jun-1998 63.2%
Jul-1998 64.2%
Aug-1998 64.0%
Sep-1998 65.2%
Oct-1998 65.1%
Nov-1998 65.1%
Dec-1998 64.9%
Jan-1999 65.6%
Feb-1999 65.5%
Mar-1999 64.2%
Apr-1999 65.3%
May-1999 66.1%
Jun-1999 67.4%
Jul-1999 66.4%
Aug-1999 65.7%
Sep-1999 65.3%
Oct-1999 65.5%
Nov-1999 65.3%
Dec-1999 65.1%
Jan-2000 64.4%
Feb-2000 65.4%
Mar-2000 65.7%
Apr-2000 65.9%
May-2000 65.6%
Jun-2000 65.9%
Jul-2000 65.4%
Aug-2000 65.5%
Sep-2000 65.6%
Oct-2000 66.5%
Nov-2000 67.4%
Dec-2000 68.1%
Jan-2001 69.0%
Feb-2001 68.6%
Mar-2001 67.9%
Apr-2001 66.9%
May-2001 65.8%
Jun-2001 65.3%
Jul-2001 65.7%
Aug-2001 66.2%
Sep-2001 66.6%
Oct-2001 65.5%
Nov-2001 64.4%
Dec-2001 62.9%
Jan-2002 62.6%
Feb-2002 62.3%
Mar-2002 61.7%
Apr-2002 61.9%
May-2002 62.8%
Jun-2002 64.4%
Jul-2002 64.5%
Aug-2002 64.0%
Sep-2002 63.1%
Oct-2002 63.1%
Nov-2002 63.7%
Dec-2002 64.1%
Jan-2003 64.2%
Feb-2003 64.2%
Mar-2003 64.5%
Apr-2003 64.3%
May-2003 63.7%
Jun-2003 63.5%
Jul-2003 63.1%
Aug-2003 63.2%
Sep-2003 63.4%
Oct-2003 64.3%
Nov-2003 64.7%
Dec-2003 63.7%
Jan-2004 63.6%
Feb-2004 63.4%
Mar-2004 64.9%
Apr-2004 64.3%
May-2004 64.3%
Jun-2004 63.7%
Jul-2004 64.2%
Aug-2004 64.5%
Sep-2004 64.1%
Oct-2004 64.2%
Nov-2004 64.0%
Dec-2004 64.4%
Jan-2005 64.6%
Feb-2005 64.8%
Mar-2005 64.9%
Apr-2005 65.1%
May-2005 65.8%
Jun-2005 66.1%
Jul-2005 66.6%
Aug-2005 65.9%
Sep-2005 66.5%
Oct-2005 66.2%
Nov-2005 66.0%
Dec-2005 65.9%
Jan-2006 65.8%
Feb-2006 67.3%
Mar-2006 67.3%
Apr-2006 67.6%
May-2006 67.3%
Jun-2006 67.2%
Jul-2006 66.7%
Aug-2006 66.4%
Sep-2006 65.9%
Oct-2006 66.9%
Nov-2006 67.6%
Dec-2006 68.3%
Jan-2007 68.0%
Feb-2007 67.0%
Mar-2007 66.5%
Apr-2007 65.8%
May-2007 66.2%
Jun-2007 67.6%
Jul-2007 67.7%
Aug-2007 67.6%
Sep-2007 66.9%
Oct-2007 67.0%
Nov-2007 67.5%
Dec-2007 66.6%
Jan-2008 66.4%
Feb-2008 65.4%
Mar-2008 65.6%
Apr-2008 64.7%
May-2008 65.1%
Jun-2008 64.9%
Jul-2008 65.3%
Aug-2008 64.2%
Sep-2008 62.9%
Oct-2008 62.1%
Nov-2008 61.9%
Dec-2008 62.3%
Jan-2009 62.2%
Feb-2009 61.6%
Mar-2009 60.8%
Apr-2009 59.8%
May-2009 59.6%
Jun-2009 58.3%
Jul-2009 57.5%
Aug-2009 57.0%
Sep-2009 56.8%
Oct-2009 57.6%
Nov-2009 56.7%
Dec-2009 57.7%
Jan-2010 57.9%
Feb-2010 58.8%
Mar-2010 58.7%
Apr-2010 57.4%
May-2010 56.4%
Jun-2010 56.6%
Jul-2010 57.2%
Aug-2010 58.4%
Sep-2010 58.8%
Oct-2010 58.9%
Nov-2010 58.9%
Dec-2010 58.4%
Jan-2011 59.1%
Feb-2011 59.5%
Mar-2011 60.1%
Apr-2011 60.4%
May-2011 60.2%
Jun-2011 59.7%
Jul-2011 59.8%
Aug-2011 59.6%
Sep-2011 60.6%
Oct-2011 59.8%
Nov-2011 59.8%
Dec-2011 59.1%
Jan-2012 59.2%
Feb-2012 59.1%
Mar-2012 59.4%
Apr-2012 60.3%
May-2012 60.9%
Jun-2012 61.6%
Jul-2012 61.8%
Aug-2012 62.3%
Sep-2012 62.3%
Oct-2012 62.0%
Nov-2012 61.8%
Dec-2012 62.5%
Jan-2013 62.2%
Feb-2013 61.5%
Mar-2013 61.6%
Apr-2013 63.1%
May-2013 63.5%
Jun-2013 63.2%
Jul-2013 62.3%
Aug-2013 62.9%
Sep-2013 63.5%
Oct-2013 64.3%
Nov-2013 64.1%
Dec-2013 63.6%
Jan-2014 63.9%
Feb-2014 63.6%
Mar-2014 63.9%
Apr-2014 62.8%
May-2014 64.2%
Jun-2014 64.5%
Jul-2014 66.0%
Aug-2014 65.5%
Sep-2014 65.3%
Oct-2014 64.9%
Nov-2014 65.3%
Dec-2014 65.8%
Jan-2015 67.2%
Feb-2015 67.8%
Mar-2015 68.4%
Apr-2015 68.0%
May-2015 68.5%
Jun-2015 68.2%
Jul-2015 69.0%
Aug-2015 68.6%
Sep-2015 68.8%
Oct-2015 68.6%
Nov-2015 68.6%
Dec-2015 69.0%
Jan-2016 68.6%
Feb-2016 69.8%
Mar-2016 70.5%
Apr-2016 70.7%
May-2016 69.7%
Jun-2016 69.1%
Jul-2016 68.9%
Aug-2016 69.4%
Sep-2016 69.2%
Oct-2016 68.2%
Nov-2016 67.7%
Dec-2016 68.8%
Jan-2017 69.4%
Feb-2017 69.1%
Mar-2017 68.8%
Apr-2017 69.4%
May-2017 70.2%
Jun-2017 70.7%
Jul-2017 70.2%
Aug-2017 70.7%
Sep-2017 70.4%
Oct-2017 70.7%
Nov-2017 70.8%
Dec-2017 70.7%
Jan-2018 71.2%
Feb-2018 71.0%
Mar-2018 70.6%
Apr-2018 70.7%
May-2018 71.2%
Jun-2018 72.6%
Jul-2018 73.1%
Aug-2018 73.0%
Sep-2018 72.9%
Oct-2018 73.0%
Nov-2018 73.3%
Dec-2018 73.1%
ChartData Download data

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Note: Because of volatility in these data, the line reflects three month moving averages

Source: Bureau of Labor Statistics, Labor Force Flows: Unemployed to Employed (16 Years and Over) [LNS17100000], and Not in Labor Force to Employed (16 years and over) [LNS17200000], retrieved from FRED (Federal Reserve Bank of St. Louis).

Copy the code below to embed this chart on your website.

The lack of strong wage growth remains one of the clearest indications that the economy remains short of full employment. As shown below, nominal wage growth has shown some signs of life in the last couple of months, but year-over-year growth remains still below levels consistent with the Federal Reserve’s inflation target combined with long-term potential productivity growth, where it would be expected to be in a stronger economy. And, the Fed’s current path is intentionally keeping unemployment from dropping further and workers from getting any additional leverage to bid up their wages.

Figure C

Nominal wage growth has been far below target in the recovery: Year-over-year change in private-sector nominal average hourly earnings, 2007–2018

Date All nonfarm employees Production/nonsupervisory workers
Mar-2007 3.44% 4.11%
Apr-2007 3.13% 3.85%
May-2007 3.53% 4.14%
Jun-2007 3.61% 4.19%
Jul-2007 3.25% 4.05%
Aug-2007 3.35% 3.98%
Sep-2007 3.09% 4.15%
Oct-2007 3.03% 3.78%
Nov-2007 3.07% 3.83%
Dec-2007 2.92% 3.75%
Jan-2008 2.91% 3.80%
Feb-2008 2.85% 3.79%
Mar-2008 3.04% 3.83%
Apr-2008 2.89% 3.70%
May-2008 3.07% 3.69%
Jun-2008 2.67% 3.56%
Jul-2008 3.05% 3.67%
Aug-2008 3.33% 3.89%
Sep-2008 3.28% 3.64%
Oct-2008 3.32% 3.81%
Nov-2008 3.50% 3.91%
Dec-2008 3.59% 3.90%
Jan-2009 3.58% 3.72%
Feb-2009 3.43% 3.65%
Mar-2009 3.28% 3.47%
Apr-2009 3.37% 3.35%
May-2009 2.93% 3.06%
Jun-2009 2.88% 2.88%
Jul-2009 2.69% 2.76%
Aug-2009 2.44% 2.64%
Sep-2009 2.44% 2.75%
Oct-2009 2.53% 2.68%
Nov-2009 2.15% 2.67%
Dec-2009 1.96% 2.50%
Jan-2010 2.09% 2.66%
Feb-2010 2.09% 2.55%
Mar-2010 1.81% 2.27%
Apr-2010 1.81% 2.38%
May-2010 1.90% 2.59%
Jun-2010 1.76% 2.53%
Jul-2010 1.85% 2.42%
Aug-2010 1.75% 2.36%
Sep-2010 1.84% 2.19%
Oct-2010 1.93% 2.45%
Nov-2010 1.79% 2.13%
Dec-2010 1.79% 2.02%
Jan-2011 1.96% 2.28%
Feb-2011 1.83% 2.11%
Mar-2011 1.83% 2.06%
Apr-2011 1.87% 2.11%
May-2011 2.04% 2.10%
Jun-2011 2.13% 2.05%
Jul-2011 2.30% 2.26%
Aug-2011 1.95% 1.99%
Sep-2011 1.94% 1.99%
Oct-2011 2.07% 1.88%
Nov-2011 1.98% 1.82%
Dec-2011 2.02% 1.77%
Jan-2012 1.75% 1.35%
Feb-2012 1.79% 1.45%
Mar-2012 2.14% 1.76%
Apr-2012 2.09% 1.70%
May-2012 1.74% 1.39%
Jun-2012 1.96% 1.54%
Jul-2012 1.69% 1.39%
Aug-2012 1.86% 1.33%
Sep-2012 1.99% 1.54%
Oct-2012 1.51% 1.18%
Nov-2012 1.94% 1.48%
Dec-2012 2.11% 1.69%
Jan-2013 2.11% 1.89%
Feb-2013 2.19% 1.99%
Mar-2013 1.93% 1.88%
Apr-2013 2.01% 1.78%
May-2013 2.14% 1.93%
Jun-2013 2.13% 1.98%
Jul-2013 2.09% 2.03%
Aug-2013 2.26% 2.23%
Sep-2013 2.04% 2.12%
Oct-2013 2.25% 2.37%
Nov-2013 2.20% 2.32%
Dec-2013 1.90% 2.26%
Jan-2014 1.98% 2.21%
Feb-2014 2.23% 2.55%
Mar-2014 2.06% 2.30%
Apr-2014 1.97% 2.40%
May-2014 2.13% 2.44%
Jun-2014 2.05% 2.34%
Jul-2014 2.08% 2.33%
Aug-2014 2.21% 2.43%
Sep-2014 2.16% 2.33%
Oct-2014 2.03% 2.22%
Nov-2014 2.03% 2.26%
Dec-2014 1.99% 1.92%
Jan-2015 2.19% 2.06%
Feb-2015 1.93% 1.66%
Mar-2015 2.22% 1.95%
Apr-2015 2.22% 1.95%
May-2015 2.34% 2.14%
Jun-2015 2.17% 2.09%
Jul-2015 2.12% 1.99%
Aug-2015 2.24% 2.08%
Sep-2015 2.24% 2.03%
Oct-2015 2.52% 2.37%
Nov-2015 2.43% 2.12%
Dec-2015 2.56% 2.51%
Jan-2016 2.55% 2.40%
Feb-2016 2.38% 2.40%
Mar-2016 2.50% 2.54%
Apr-2016 2.61% 2.58%
May-2016 2.44% 2.33%
Jun-2016 2.56% 2.43%
Jul-2016 2.76% 2.62%
Aug-2016 2.47% 2.42%
Sep-2016 2.63% 2.56%
Oct-2016 2.70% 2.36%
Nov-2016 2.57% 2.40%
Dec-2016 2.65% 2.49%
Jan-2017 2.40% 2.35%
Feb-2017 2.72% 2.39%
Mar-2017 2.55% 2.24%
Apr-2017 2.51% 2.24%
May-2017 2.46% 2.33%
Jun-2017 2.50% 2.32%
Jul-2017 2.49% 2.22%
Aug-2017 2.60% 2.31%
Sep-2017 2.83% 2.59%
Oct-2017 2.28% 2.21%
Nov-2017 2.47% 2.35%
Dec-2017 2.66% 2.43%
Jan-2018 2.77% 2.43%
Feb-2018 2.57% 2.47%
Mar-2018 2.64% 2.60%
Apr-2018 2.64% 2.64%
May-2018 2.79% 2.73%
Jun-2018 2.78% 2.77%
Jul-2018 2.77% 2.77%
Aug-2018 2.96% 2.94%
Sep-2018 2.79% 2.79%
Oct-2018 3.17% 3.16%
Nov-2018 3.13% 3.28%
Dec-2018 3.15% 3.32%

 

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*Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income.

Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series

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My colleagues, Josh Bivens and Ben Zipperer, recently published a useful short study on the importance of locking in full employment for the long haul. The whole report is useful, but I’m stealing a chart (see below) because it demonstrates just how important full employment is for realizing strong and broadly based wage growth. The dark bars represent average annual real (inflation-adjusted) wage growth in the late 1990s, the last experience with a persistently tight labor market. As you can see, real wage growth was strong and broad. The light blue bars represent wage growth since 1979 over all other years (except the late 1990s). The average annual growth in all those years was zero or worse for middle-and low-wage workers. The case is clear. Reaching genuine full employment should be the main concern of the FOMC so that workers across the wage distribution—white and black, young and old—see the benefits of tight labor markets in their job prospects and wages.

Figure D

The only period of high pressure in the labor market since 1979 led to rapid wage gains: Average annual wage growth from 1996–2001 vs. all other years between 1979 and 2017

Wage percentile All other post-1979 years 1996–2001
20th -0.15% 1.75%
Median -0.02% 1.66%
95th 1.01% 1.96%
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Note: Wage growth is inflation-adjusted.

Source: Authors’ calculations from data obtained from the State of Working America Data Library from the Economic Policy Institute (EPI 2018)

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