An astounding report by the Wall Street Journal recently found that uneducated Americans have seen the strongest growth in wages in almost a decade.
According to the Department of Labor, the group that benefited the most from the Trump Economy are workers with less than a high school education. That group grew about 21% from the beginning of 2009 to the end of 2018.
The trend in higher wages was the same for other education levels, ranging from a high school degree through a college bachelor’s degree and higher. However, no other group experienced as much wage growth, as those individuals with the least amount of education.
Those individuals with a high school degree saw about an 18% increase in wages over the same time period. While individuals with a bachelor’s degree or higher saw roughly the same numbers, about 18%, however, individuals with some college education (minus a degree), experienced about a 14% wage growth, which was the slowest wage growth within the group.
In the first quarter of 2018, about a year into Trump’s presidency, wage growth for workers without a high school degree surpassed those individuals with high school and or college degrees.
Overall since 2009 wage growth in the U.S. has been largely stagnant. According to the Economic Policy Institute, the “year-over-year” growth rate for non-farm workers hasn’t hit the purposed government baseline of 3.5% since January of 2009. Perhaps even more astounding, from April of 2009 to August of 2018 wage growth never hit above 3%, that’s almost a decade were wages didn’t rise.
The trend has worried some economists who expected wages to begin rising rapidly along with the number of jobs available in the economy. Considering there are currently 6.7 million job openings in the marketplace and just a little under 6.4 million available workers according to the Bureau of Labor Statistics.
The mathematical mismatch under normal circumstances would naturally create a demand for higher wages in order to fill those openings. However, the perplexing trend of hourly earnings rising to just 2.7%, up only one-tenth of a point in one month has economists scratching their heads.
Cathy Barrera, chief economist at Zip Recruiter, an online employment marketplace said, “Given these trends, the sluggish wage growth rate is even more perplexing.”
Adding, “If employers want to fill these 6.7 million job openings, they are either going to have to raise wages or find more clever and creative ways to recruit workers off the sidelines.”
Barrera contends that workers have gotten more confident about leaving their current positions for better ones.
“While more people are getting into jobs, folks aren’t moving around much once they do,” she said. “Unfortunately, the lack of mobility means that employers face little pressure to raise wages. They just aren’t competing over jobholders.”
Jessica Rabe, co-founder of DataTrek Research also acknowledged the discrepancies between wages and job openings, “This is the ongoing difficulty of employers finding qualified workers. The disparity between job openings and hiring is over a million again for the second month in a row.”
Adding, “In terms of wages, it’s hard to increase wages when you don’t have the proper qualifications for a worker to fill that role.”
Another factor working against wage gains is demographics and the aging workforce.
Although the unemployment rate stands at 3.8% the lowest since 1969, those individuals leaving the workforce are surging. Currently, a record number of 95.6 million individuals have dropped out of the labor market, which is a 21% increase over the past decade.