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Why is wage growth so slow?

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Listed:
  • Mary C. Daly
  • Bart Hobijn

Abstract

Despite considerable improvement in the labor market, growth in wages continues to be disappointing. One reason is that many firms were unable to reduce wages during the recession, and they must now work off a stockpile of pent-up wage cuts. This pattern is evident nationwide and explains the variation in wage growth across industries. Industries that were least able to cut wages during the downturn and therefore accrued the most pent-up cuts have experienced relatively slower wage growth during the recovery.

Suggested Citation

  • Mary C. Daly & Bart Hobijn, 2015. "Why is wage growth so slow?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00041
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    Citations

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    Cited by:

    1. John C. Williams, 2015. "Data is the new black: monetary policy by the numbers," Speech 140, Federal Reserve Bank of San Francisco.
    2. Mr. Stephan Danninger, 2016. "What's Up with U.S. Wage Growth and Job Mobility?," IMF Working Papers 2016/122, International Monetary Fund.
    3. Salle, Isabelle & Seppecher, Pascal, 2018. "Stabilizing an unstable complex economy on the limitations of simple rules," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 289-317.
    4. Bruce Fallick & Daniel Villar Vallenas & William L. Wascher, 2016. "Downward Nominal Wage Rigidity in the United States During and After the Great Recession," Finance and Economics Discussion Series 2016-001r1, Board of Governors of the Federal Reserve System (U.S.), revised 15 May 2020.
    5. John C. Williams, 2015. "The view from here: outlook and monetary policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    6. John C. Williams, 2015. "The recovery’s final frontier?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    7. John C. Williams, 2015. "Looking forward: the path for monetary policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    8. Dany Brouillette & Olena Kostyshyna & Natalia Kyui, 2018. "Downward nominal wage rigidity in Canada: Evidence from micro-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 51(3), pages 968-1002, August.
    9. Albuquerque, Bruno & Baumann, Ursel, 2017. "Will US inflation awake from the dead? The role of slack and non-linearities in the Phillips curve," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 247-271.
    10. de Ridder, M. & Pfajfar, D., 2017. "Policy Shocks and Wage Rigidities: Empirical Evidence from Regional Effects of National Shocks," Cambridge Working Papers in Economics 1717, Faculty of Economics, University of Cambridge.
    11. Rebecca M. Blank, 2016. "What Drives American Competitiveness?," The ANNALS of the American Academy of Political and Social Science, , vol. 663(1), pages 8-30, January.
    12. John C. Williams, 2015. "Looking forward, forward looking: the path for monetary policy," Speech 138, Federal Reserve Bank of San Francisco.

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