Despite U.S. Economy Improvement Wages Remain Low
Despite U.S. Economy Improvement Wages Remain Low
The U.S. economy has reached a critical juncture. Growth is outstanding. Unemployment is so low that employers are struggling to find workers. But a major puzzle persists: why is wage growth so slow?
AUDIE CORNISH, HOST:
There's been a lot of good economic news lately, something that President Trump isn't shy about pointing out.
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PRESIDENT DONALD TRUMP: But we've turned it all around. Once again we are the economic envy of the entire world. When I meet the leaders of countries, the first thing they say invariably is, Mr. President, so nice to meet you. Congratulations on your economy.
CORNISH: And the economy is growing at a healthy pace. The unemployment rate has fallen to 3.9 percent, and the job market is so tight that many employers are struggling to find workers. To talk about all this good news and what happens if trade tensions with China boil over, we're joined by NPR's Chris Arnold. Hey there, Chris.
CHRIS ARNOLD, BYLINE: Hey, Audie.
CORNISH: So has the president turned the economy around?
ARNOLD: Well, presidents like to take credit for a strong economy of course. This was an ongoing recovery back when Obama was in office. It's still an ongoing recovery. But no matter your politics, the economy is definitely strong and so strong in fact that many companies all over the country are having a very hard time finding workers. I talked to one guy today who runs a big window-tinting car business in Boca Raton, Fla.
CHARLES BONFIGLIO: Well, my name is Charles J. Bonfiglio. I'm the CEO of Tint World Automotive Styling Centers franchise. And we have about 60-plus locations around the U.S. and Canada.
ARNOLD: And Bonfiglio says he's opened up 20, more franchises are opening up in - all over the place, even Canada, too, because of the strong economy. And he says it's really, really hard right now to find workers.
CORNISH: What is he doing to try to recruit and retain workers for this window-tinting business?
ARNOLD: Well, he's doing some things you might expect. Although health care, 401K plans - those actually aren't the kind of things we would normally see for window-tinting businesses. He's doing that. And in his corporate office, he's doing all kinds of stuff.
BONFIGLIO: I mean, we have car-wash day once a month. We have - we just had - today we had massage day where we had a masseuse come in here and massage each of the employees for, you know, a half an hour to an hour. We have ice cream day. You know, so we do different things to make it fun in the office and the culture.
ARNOLD: I kind of like massage day.
CORNISH: Yeah, talk about some perks.
ARNOLD: Other companies are waiving drug tests like for marijuana, offering egg freezing, pet insurance, all kinds of stuff. But one thing that employers have not been doing overall if you look across the economy, across industries, wages on average are just not rising that much.
CORNISH: Why is that? I know that's a mystery economists have been talking about, but it seems like such an easy fix.
ARNOLD: It may be, but the answer to that is apparently not that easy. I don't know it. And it's even a tough one for economists who are much smarter than I am. We talked to Austan Goolsbee. He's an economist at the University of Chicago, also a former top Obama adviser.
AUSTAN GOOLSBEE: We don't know, and that's the biggest puzzle that we're trying to figure out. And we've been for a while waiting for the wages - oh, they're about to go up. But they kind of haven't - still haven't been going up that fast. And the real wage which the economists call the real-wage year - how much your wages went up minus how much inflation went up - at best it's pretty stagnant.
CORNISH: But there have got to be some theories, right, Chris? What are people saying?
ARNOLD: There are. The short version is the decline of unions might be playing a role or other ways that employees just don't have the power that they used to to negotiate better pay. Productivity growth is slow. It's kind of jargony, but that's another reason. And workers might be getting compensation like we heard about - health care, bonuses, gym memberships and other stuff like that.
CORNISH: There's also this big unknown hovering out there, and that's the tariff fight and the threat of a trade war.
ARNOLD: Right. And the president, you know, says, hey, threatening big tariffs gets us good deals. Other people disagree. Austan Goolsbee talked about this with me. He said, look; if the tariffs stay pretty small, we'll be fine. But if we get a lot more tariffs, China does the same thing.
GOOLSBEE: The way I describe it is, we're saying, if you don't do as we say we're going to light your house on fire. And they say, oh, yeah, well, if you light our house on fire, we're going to light your house on fire. Both of our houses are on fire. We have to live in these houses. If we get into a spiraling trade war between the two biggest economies in the world, there will be a recession in both of those economies. We should not kid ourselves. That is exactly what will happen.
ARNOLD: So, yeah, the economy is really strong, but events can change quickly. And we have seen that before.
CORNISH: That's NPR's Chris Arnold. Chris, thanks for explaining it.
ARNOLD: You're welcome.
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