After long periods of speculation, wages in the United States might finally see a serious increase.
Average hourly earnings have risen by just two percent per year during the last six years. However, economists are predicting that the rate of growth could soon increase it by 2.4%. This would be the highest rate of growth for hourly earnings since August of 2009.
Economists had predicted an increase in the wage rate in recent years, but it has never quite met their expectations.
This time might be different. For one, the growth rate at this time last year was weak, giving this year’s period a chance to shine. Meanwhile, the unemployment rate is at its lowest point in more than seven years. In what has become a favorable job market for workers, employers are expected to increase wages in order to retain staff.
New York economist Jay Feldman said, “"It's not a big acceleration. It's a little bit above the range it's been at for the last few years, but given the tighter labor market, it's what one would expect at this point. There's a little bit less slack, and a lot of survey data have been pointing to faster wage growth for some time."
Figures released from the Commerce Department showed wages increasing by 0.5% and 0.6% in August and July respectively. This represents the largest back-to-back rises for this year, and it shows that the economy is performing strongly.
End of the year predictions also look favorable.
More than 19% of Americans say that they expect to receive an increase in pay sometime in the next six months. That is the highest rate since January and the second greatest since November of 2010.
Meanwhile, 13% of managers say that they plan to increase pay in the near future.
The Employment Cost Index is expected to increase as well. In the first quarter of this year, it showed a 2.6% increase, but the rate slowed to 2% in the second quarter. The index will be released later this month.