Why Are Wages Low in the Growing Job Market? | WSJ

Why Are Wages Low in the Growing Job Market? | WSJ

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– Right now in the U.S. labor market, we’re looking at two numbers. The first is 106. That’s the number of consecutive months the U.S. labor market has added jobs, the most ever recorded.
(pleasant orchestral music) The second is 3.2%. That’s about how much wages have grown each month in 2019 from a year earlier. In a healthy economy, annual wage growth is usually around 3.5%, so despite record-breaking jobs growth, wages aren’t growing as fast as expected and many economists aren’t
sure we’re going to see much of a pickup from here. (pleasant piano and orchestral music) Let’s take a closer look at the numbers. In theory, low unemployment
should encourage employers to raise wages since they’re
competing to retain workers and also hire from a
shrinking pool of employees, but that’s not what’s happening. Employee pay and benefits as a percentage of gross domestic income fell to 52.7% in last year’s third quarter, marking the fourth
straight quarterly decline. Compare that to when it was as high as 59% in 1970 and 57% in 2001. In other words, if workers
commanded as much domestic income as they did in 2001, they’d
have nearly $800 billion more in their pockets or $5100
per employed American. Economists have identified some
forces contributing to this. One of the factors squeezing Americans out of higher wages is automation. Rapid advancements in robotics technology and artificial intelligence
are expected to displace millions of jobs in coming decades as routine tasks from driving trucks to checking out at the grocery
store become automated. The share of tasks at risk
for food preparation workers, for example, is 91%. Economists say workers in industries where automation is taking over jobs have less power to
bargain for higher wages. Analysts at the Brookings Institution say less educated workers
are especially likely to have their jobs
displaced by automation, so it ends up being these workers who have a harder time
demanding higher wages. Another contributing factor
to slower wage growth is the decrease in unions. Union membership in 2018 is about half of what it was in 1983. That means the power to
bargain for higher wages has decreased, and employment contracts have become less favorable for workers. For example, employment
contracts have become increasingly riddled with
noncompete agreements. Evan Starr, an economist at
the University of Maryland, estimates that roughly
one in seven workers making $40,000 or less signed noncompetes. His research found that states
that enforce the clauses see lower wages across the
course of workers’ careers than states that don’t. That’s because noncompetes
can discourage workers in low-paying jobs from looking elsewhere since they might not be able to move from one company to another. Even interns are increasingly being hit by noncompetes, which can prevent them from moving on from temporary jobs to full-time gigs that
would pay them more. Another factor contributing
to lower wage growth is the growing gig economy. With the growth of the
freelance and gig economy, there’s more uncertainty for workers. This gives them less
leverage for negotiation and fewer rights than full-time
employees would receive. In some cases, gig economy
workers have been able to push for bigger paychecks. New York passed laws in 2018
that required Lyft and Uber to pay drivers a minimum
of $17.22 an hour, but that’s not been the case everywhere. Globalization is another reason why wage growth has been sluggish. Because of increased
competition from overseas where wages are sometimes lower, American companies are often reluctant to raise wages for U.S. workers. U.S. companies have been outsourcing jobs to places like Mexico, China, and India where they can produce
goods for much cheaper. That means U.S. workers have been left with less bargaining power when
it comes to their own wages, the idea being if your boss
can find a worker overseas who’s willing to take a
much smaller paycheck, why would they be willing to pay you more. For example, Mexican
vehicle assembly workers made less than $8 a
hour on average in 2017. In comparison, the median wage
for North American workers in the auto manufacturing
industry was 15 to $16 an hour, so how do we predict wage growth
will change in the future? Is this slower growth
expected to continue? It’s tough to say how this will play out, but members of Congress
are pushing for legislation to increase the minimum
wage, and recently, the House did pass the Raise the Wage Act, although people say it’s probably unlikely to make it through the Senate. (pleasant orchestral music)

100 comments

  1. Y'all need to get Andrew yang to do this topic, his knowledge is staggering ,I hear some of his message here nice to hear.

  2. One factor that Elizabeth Warren described in one of her books is the ever increasing entry of women into the workforce. If you have tens of millions of more people wanting to sell their labor services to employers, then the supply curve will shift and the wage rate on the demand curve will stagnate. While personal wages are stagnating because of the desire for two incomes per household, the household income and purchasing power should go up.

  3. short answer:
    the last 30 years of legislation has been aimed at benefiting capital and investment returns and lowering corporate taxes at the expense of labor rights. it's not an accident, the economy is working exactly as it was designed to. if you want to do well in a low growth, low wage, high capital return economy, you have to invest. wages really are becoming the means to the acquiring capital to invest which is the road to wealth, rather than a road to wealth itself.

  4. Full-time security job is about $23,000 a year in Ohio. College degree preferred, must work every Saturdays and Sundays. No air conditioning in parts of the building.
    Don't like it? There's no shortage of submitted job resumes, people looking for that position.

  5. Summary
    106 conservative month of job growth within the USA but only 3.2% of wage growth compared to typical 3.5%.

    The reason for the slower growth in wage is to fewer union memberships, rise in automation, the introduction of the gig economy and lastly globalization.

  6. it is a circle, wages go up, prices go up to support it, people complain that they can't afford it, wages go up, prices go up to support it.

  7. its called equilibrium , this video is made keeping US in prospective ,but the whole earth contains humans ,and everyone is going in the same direction called forward!

  8. Simple young girl, pure thought, simple conclusion.

    Look and realize and admit that the world is far more complicated than you seeing.

  9. everyone blames automation but everyone seems to forgot human invented automation therefore there are people who are highly paid in those sector but yet wage isn't growing… the real short answer is corporate profit continue to outpace everyone's wage. it's called greed. most companies out there can afford to pay their employees more but they're still focused on outsource some part of their operation to another country every month to drive up their stock price. LOL

  10. The causes pointed in this video are incorrect. The biggest cause of all of this is a thing called "capitalism". Those who control the market, control the wages.

  11. People can blame China all they want, but in truth China will have this problem soon in fact i predict it will hit China sooner than it did the West, automation will hurt workers world wide.

  12. The Federal Government is taxing the US Employees too heavily. In addition to personal tax, there is value added tax on nearly on all goods and services. The take home salary shrinks to a very small amount after taxes plus the numerous other taxes take a very big sum in the gross salary.

  13. The lack of collective bargaining in the workplace has led to the stagnation of wages over the last few decades. UNITED we bargain. DIVIDED we beg.

  14. Point 1: Low wage workers have trouble demanding higher wages.
    Uh, yes. And this is a surprise to whom??

    Point 2: Unions are declining.
    Again, yes: their value is not substantiated and their propensity to negotiate wages and benefits that exceed the value their employees generate for businesses is not sustaninable.

    Point 3: The gig economy
    Nobody is holding a gun demanding anyone drive for uber. And setting minimum wages, as stated in NY, results – in every single case I've seen – in negative consequence for low-wage workers. Which is obvious to anyone with the most rudimentary understanding of prices and market economies.

    Point 4: Globalization
    Correct: people in highly developed countries like the US, do not want to work for the same wages as those in developing countries like China, Vietnam and India.

    I really expect alot more for the WSJ; this was an abysmal disappointment.

  15. Raising the minimum wage would be the worst possible decision if you truly care about low wage workers. Indeed, if you want to help low-wage workers, eliminate the minimum wage entirely.

    see, what nobody wants to realize: prices REFLECT value. nobody sets a price. if employer A, says, "hey, let's screw this little guy and cut his wages", employer B says "hey, A is a moron, let's steal his valuable employee".

    you know, reality. it is becoming more and more lost in these discussions.

    every single minimum wage effort and study shows this. Every. Single, One. Please point out one example to the contrary. I wont wait, b/c you cant.

  16. The wages are controlled by the employer and not the workers. That is why wages grow slowly and we have the working poor. Why would someone want to hire a person for minimum wage when they know minimum wage will not help the worker?

  17. Because Immigrants don’t mind having 3 jobs and working under the table at below minimum wage . 12 of them will live in one house .

  18. The automation problem is real. America has automated away 4 million manufacturing jobs, and is about to do the same to retail jobs, call center workers and truckers. Have you noticed your malls closing? They've been replaced by Amazon with wall to wall robot fulfilment centers.

    There is one guy, Andrew Yang, running for president trying to address this problem. Yang believes that mass displacement due to automation is far closer than most people realise and goes into detail about it here (timestamped) https://youtu.be/cTsEzmFamZ8?t=1012 #yanggang #yang2020

  19. IN THE CAPITALIST USA.the most important deal,is to make TRILLIOS for the VERY VERY RICH,!This has started with REAGANISM / ECONOMICS ,TO ERASE F.T.ROOSEVELTS ,LABOR LAWS,KILLING WAGES/THE UNIONES PROTECTIONS/OUTSOURCING JOBS/TO KILL THE MIDDLE CLASS FOREVER!!!CUTTING TAXES TO THE RICH '0',FOR POLITICAL GAINS /BRIBES,WHICH CREATED 'IDEEL' ,TRILLIONES ,IN OFFSHORE BANKS !!MORE TRILLIONS,PROFITING FROM DESTROYING OUR RESOURCES ,WATER/AIR/THE PLANET ,IS INVESTED IN WALL STREET,BUY AND SELL ,FROM EACH OTHER,BANKS/ MAKING MONEY,FROM CHEAP CORPORATE LOANS !THERE IS NO INCENTIVE TO MAKE INVEST IN SCHOOLS/BRIDGES/ROADS/MEDICARE /EDUCATION!!!CAPITALISM DOES NOT HAVE TO DO THESE THINGS !IF DEMOCRATIC/SOCIALISM ,IS AVOIDED AT ALL COSTS??ALL WILL BE JUST LIKE THE COMMUNIST /USSR/UNDER THE COVER OF CAPITALISM!!THE SAME WAS TRUE ,THE VERY POWERFUL ,MAIDE THE RULES ,GOT TO CONTROL THE MONEY,THE WORKING CLASS,MOST RICHEST ,INSTITUTEN WAS THE ARMS FACTORIES !!WE GOT ALL THAT ,THE ARMAMENT INDUSTRY ,THE DEFENCE MILITARY COMPOUND,IS THE LARGEST INSTITUTION ,THEY BUY THE SENATE/THE CONGRESS,AND CREATE UNENDING/WARS !!THE PROBLEM IS OUR EDUCATION SYSTEM ,THAT HAS FALLEN SOLAW..WE ARE QUITE BEHIND SEVERAL "SOCIALIST ',COUNTRIES,LIKE SWEDEN ,DENMARK,(GERMANY ),THAT OFFER FREE EDUCATION ,IN A VERY HIGH STANDARD,AND FREE MEDICAL CARE,TAXING THE RICH ,WHO CAN USE THEIR MONEY ,CREATING A BALANCED,SOCIAL EQUALITY! THE SOCIETY in 2019 ,IS VERY UNBALANCED ,AND THIS IS VERY DANGEROUS ,ALL WARS ,HAVE STARTED WHEN THIS KIND OF WEALTH DISTRIBUTION ,TAKES OVER !THERE IS NO CHANCE OF THAT ,MEDIA/TRUMP/THE GOVERNMENT ,HAS USED THE WORD BY TRUMP <"AMERICA WILL NEVER BE SOCIALIST',WITH THE GREAT APPROVAL,OF CONGRESS ON HIS SPEECH OF THE UNION NIGHT !!PLENTY OF HAPPY CLAPS,OVATIONS WERE THAT NIGHT !APPROVAL WAS TO LARGE ALL OVER THE COUNTRY,I HOPE THEY KNEW ,THAT MOST WILL PART OF THE BIG AMERICAN DREAM…THAT DID NOT STOP THEM CHANTING,USA//USA//USA//USA// ,WAITTING FOR 'TRUMP,TO MAKE AMERICA GREAT AGAIN ?? HOW ???HE JUST BROUGHT IN A FEW MONTH ,USA.CLOSER TO THE CRASH !!

  20. Corporate greed. And compared to really skilled Chinese workers and new industrial robots, the American workers really suck.

  21. Yang2020, Make America Think Harder. Who wouldn't want $1000 a month of free money. Freedom isn't free but the freedom dividend is.

  22. Simple, businesses are greedy, taxes are high, what do you expect. People need to learn to work skilled trades on their own terms and cut out trading hours for dollars from businesses. Unions suck money off the backs of its workers making things more costly. Unions don't really help at all, it's a con.

  23. Wall Street journal sucks now. They are afraid to say that CEO's making 10-100+ millions dollars are another reason why wages are so low. All the record profits are going into stock buybacks and not for employee bonuses and higher wages.

  24. Trump-Republican ideological trade and social policies have screwed all but the very, very few for at least a generation. And that goes double for rural unemployed, uneducated, opiate-addicted Trumpers. Trump is crashing them beneath his feet.

  25. have many new jobs for the people is a very great achievement already … now demanding high pay already … WSJ is ridiculous

  26. Opinion by our host, Shota: “#1 reason for low wages is weak antitrust enforcement in mergers which is helping monopolies. The higher the antitrust enforcement the higher the new firm entry in the economy which increases competition for labor. Until the U.S. Attorney General publicly discourages horizontal and vertical mergers, especially in the banking industry, very little will change.” Watch our E P I S O D E 7 tomorrow on firm entry and real incomes from 1948 to 2008 at PublicPolicyShow.com (9pm EST LIVE).

  27. I always wondered why people stopped supporting unions, one of the dumbest self inflicted moves ever, pushed by misinformation and big corpo propaganda

  28. You're not talking about people who are moving to automation because of the shortage in migrant workers as American ones refuse to do such works as farming ones etc.

  29. You should read "The Accidental Superpower","The Absent Superpower" and "After the Superpower" by Peter Zeihan.

  30. Do people think forever wages will rise ? One day one loaf of bread will be $100 because minimum wage is $70 an hour

  31. Economies are utilities of a nation to provide for its peoples needs. Allowing such a critical social service to be controlled by random clowns of all walks of life is one of the worst ideas humanity has ever had.

  32. Hardcore Absolute Fact: 1.) Wages are red zone epidemically low ( not livable, not motivational, no value ) 2.) 40%+ Americans live in perpetual poverty ( in constant suffrage and no ability to live with dignity ) 3.) Tips / Exploitation Gig Economy is a pyramid scheme while the fat cats never work and exploit human labor even more 4.) Globalization is a crime 5.) Forced "desperation" low IQ immigration into developed nations is a crime 6.) Incentives To Bring In Extremely wealthy foreigners into USA to displace poor Americans ( generational locals ) is a felony 7.) Capitalism = Communism is a wolf in sheep's clothing = Hidden Communism!!!

  33. these companies shipped there production overseas for cheaper labour but bring there products back here and sell it for a premium…keep your cash and credit in your pocket folks were being played for fools

  34. If people don’t have jobs or discretionary money to spend on your product in you country where do you think most of your customers will come from. Short term gain for long term pain. The decline of America as a power has already begun and unless things drastically change it will fall behind others

  35. Not a mention of illegal immigration beyond other than what might be implied, obliquely, by "Globalization". It's stunning how dishonest, or perhaps blind, our institutions are to the impact of illegal immigration. I agree that the factors cited in the video have an impact on wages, but surely illegal immigration should at least be considered.

  36. Hope people don’t conclude after watching this video that trickle down economics doesn’t work, because it does. The wealth trickled down to India and China and even to business owners here who will use automation and who will in turn pass those savings on to their consumers.

  37. Low wages due to desperate people who need to work and employers who love it that way. Their profits keep growing.

  38. It is interesting this administration talks about job growth to give people the perception of a great economy, but does not talk about wage growth. There are more people in the work force yes, but the salaries are lower due to over saturation. The Atlanta ga area was one of the better places to live. Yes, we have affordable housing, but the market is very competitive. There are too many ways companies are filtering applicants such as distance for example. Henry county is extremely weak on warehouse positions @ 11.00 / hr, but the peachtree city/newnan pays around 15.00 to 16.00 hr. 35 miles away.

  39. BS. Come to greater Cleveland McDonald’s paying $14/hr and chick fila $16/hr. Walmart and Aldi in that range too. If you want more money learn a trade skill for fraction the cost of college. Learn and have skills employers want not some bs you find “interesting”.

  40. Wait i understand for high salary jobs to have a noncompete clause, but low wage or intern to have that seems questionable.

  41. Sort of like she says, "If your employer can find an H1B, someone in a developing country, or a form of automation that can do your job for peanuts or absolutely nothing at all, why should they pay you a decent living wage?" Corporations today are for the benefit of their investors/stockholders, not for the customer, the consumer, nor anyone or anything else – Amen!

  42. Poor people have been blaming "automation" since the industrial revolution times. The real reason they can't get a job is because they refuse to update their skillset.

  43. Hardcore Absolute Fact: A livable wage is now $20 – $30/Hour full time, depending on state just to keep up with cost of living!!!! $15/Hour is enough for a high schooler living at home with mom and dad and no bills!!!!!!

  44. People must be kept poor in order to control them – raise armies, navies, laborers and keep them from gaining control. Wages will always be low – it is stupid to talk about them going up.

  45. companies in same fields are grouping together and instituting a globalist model.all either fire skilled and experience workers and lower wages.lower the bar to the lowest denominator.soon all jobs in that field are at the lowest possible that even experienced workers cant get a decent wage.they created a musical chair game that profits wall street but keep all hourly workers poor and struggling to make a living.the 32 hr a week for full time with 40hr to get overtime also has harmed people.many are forcing a full ability(must be aval 7 days a week,24 hrs a day) prevents people from getting a second job.the non-competes with out a severance package is also hurting people.

  46. Those wages will level out. We're early in the plan to bring back jobs to America. The problem is that we're trying to compete on a playing field that is not level. The theory that supports this is that Americans were supposed to keep the well paying jobs while the lower paying jobs were sent to countries that have lower wages. In theory, this is a win-win (pareto efficiency) in that the lower wage countries get jobs that increase their standard of living and produce goods at a lower cost for the other country. What is missed in this equation is that grass roots industry, most times a manufacturing/value-add types of industry, are the basis of more complex economies. It is a multiplier effect with a high number of instances of a low multiplier. All these instances combined leads to a large impact. Add to this that the technology that is the basis of the economic advantage that produces the high paying jobs does not stay unique for long periods, and you have those jobs too becoming portable. Why have a manufacturing team on one side of the globe, creating material communication and responsiveness issues with the engineering team on the other side of the globe? Move the engineering to the same location as manufacturing and you have a more responsive company.

    That said, we are in the process of leveling that playing field with economic tooling. The jobs are starting to come back and we will start to see the multiplier effect and labour supply/demand fill in the missing middle class. It is a very interesting time to be alive! We are witnessing the reversal of decades of bad policy.

    The only part we don't fully see yet is how this will shake out in a stock market that makes it's money on growth. I think the time of free money is coming to a close, along with the close of abusive economic policy.

  47. Well… McDonald's stopped fighting against the $15/hr movement. They just added kiosks, didn't put back the cash registers or hire back the cashiers. I went to a McDonald's where we ordered via kiosk. There was a manager and two workers. The manager handled the window and brought food up to the front. She never had to touch the one cash register.

  48. Are you guys idiots making this video? More supply of workers then wages would be low. You cant compare to the past and say it should be the same at present.

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