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"Where's My Raise?": American Workers Suddenly Realize "Recovery" Isn't Real

Tyler Durden's picture




 

In March, we solved the mystery of America’s missing wage growth. Here is the conundrum facing PhD economists:

One of the biggest conundrums, one that has profound monetary policy implications, and that has been stumping the Fed for the past year is how can it be possible that with 5.5% unemployment there is virtually no wage growth. The mystery only deepens when the Fed listens to so-called economist experts who tell it wage growth is imminent, if not here already, and it is merely not being captured by the various data series.

In fact, the Fed is still trying to understand why wages aren’t rising more quickly. After all, once you triple-adjust the Q1 GDP print, the economy is on sound footing. Here's an excerpt from Janet Yellen’s speech in Rhode Island last month:

Finally, the generally disappointing pace of wage growth also suggests that the labor market has not fully healed. Higher wages raise costs for employers, of course, but they also boost the spending and confidence of customers and would signal a strengthening of the recovery that will ultimately be good for business. In the aggregate, the main measures of hourly compensation rose at a rate of only around 2 percent through most of the recovery.

The answer to this apparent quandary, lies in the distinction between what the BLS classifies as “non-supervisory” workers and “supervisory" workers. The following charts tell the story nicely.

 

What the above suggests is that in fact, wage growth in America has never been higher — for your boss. Or, put differently:

For all who are still confused why there are no wage hikes despite the Fed's relentless efforts to micromanage the economy and stimulate wage growth via trickle-down record high stock market prices, the answer is that there is wage growth.

 

Just not for 83% of the working population.

Now, with pundits parroting the “robust” jobs market refrain on the nightly news, “everyday Americans” are beginning to ask “where’s my raise?” WSJ has more:

The unemployment rate here and in other thriving metropolitan regions across the U.S. is below where it was when the financial crisis blew a hole in the U.S. economy in 2008. Now, many American workers are asking: Where’s my raise?

 

Questions about the slow pace of wage growth aren’t only stumping workers, but also economists and policy makers at the Federal Reserve—with the answers weighing on households and the larger U.S. economy.

 

When U.S. unemployment rates fall, conventional notions of supply and demand predict wages will go up as firms bid for increasingly scarce workers, and there are signs of that, for example, in building trades and restaurants. “Basic economics hasn’t gone out the window,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said in an interview. “When employment grows, wages will start to grow.”

 

But a Wall Street Journal analysis of Labor Department data points to persistent constraints on worker pay, even as the economy approaches full employment. The Journal found 33 U.S. metropolitan areas—from the small to the sizable—where unemployment rates and nonfarm payrolls last year returned to prerecession levels. In two-thirds of those cities—including Columbus; Houston; Oklahoma City; Minneapolis-St. Paul, Minn.; and Topeka, Kan.—wage growth trailed the prerecession pace. 

As The Journal goes on to note, the American Middle Class has been suffering from stagnant pay for quite some time:
Stagnant incomes are a long-running problem for the American middle class. Median household income, adjusted for inflation, was $51,939 in 2013, only slightly higher than it was in 1988, when it was $51,514. Slow wage growth is part of the problem; adjusted for inflation, blue-collar pay has increased just 0.3% a year over the past quarter-century.
This could be partially due to America's vanishing workers (described in detail here):
Companies tapping pools of workers who have disappeared from the U.S. unemployment tallies, creating what economists describe as hidden slack in the economy. Until this invisible labor supply is spent, these men and women, including part-timers, temporary workers and discouraged labor-market dropouts, could hold wages down. 
Another possibility — and this speaks further to the anemic pace of the global economic "recovery" and the utter failure on the part of central bank policy to bring about sustained economic prosperity — is that an endemic lack of demand is keeping the so-called virtuous circle of increased wages, higher consumption, increased profits and investment levels from taking hold.

 

In other words, as long as global trade is "in the doldrums" (to quote BofAML) and as long as aggregate demand is subdued, wage growth will remain elusive for more than three quarters of American workers.


 

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Thu, 06/04/2015 - 17:03 | 6164365 lehmen_sisters
lehmen_sisters's picture

Getting a raise .....LOL. That is so 1920's.

Thu, 06/04/2015 - 17:06 | 6164377 Edward Quince
Edward Quince's picture

I assure you, it is coming. imminently. Now stop commenting on internet sites and be productive. A massive rise in productivity numbers is also right around the corner.

Thu, 06/04/2015 - 17:15 | 6164412 Magnix
Magnix's picture

Got a 3.5% raise last year and expecting another one pretty soon. I guess its just depends on what type of job they're working.

Thu, 06/04/2015 - 17:29 | 6164424 JRobby
JRobby's picture

Well! Thank you Mr. Helper!

 

 

Robby

Thu, 06/04/2015 - 17:50 | 6164509 prodigious_idea
prodigious_idea's picture

Sucks to have somebody with contrarian facts, doesn't it.

Thu, 06/04/2015 - 17:59 | 6164537 JRobby
JRobby's picture

Humility

Thu, 06/04/2015 - 18:09 | 6164570 NotApplicable
NotApplicable's picture

Damn you invisible labor force!

Thu, 06/04/2015 - 18:25 | 6164608 kaiserhoff
kaiserhoff's picture

Gubermint workers get raises.

Everyone else gets what the little boy shot at...,

   nada.

Thu, 06/04/2015 - 18:43 | 6164689 MonetaryApostate
MonetaryApostate's picture

Get real with yourselves folks, the only thing of real value at this time is your intelligence, and that means you will need to come up with stuff worth billions or risk being "Dust in the wind"...

Thu, 06/04/2015 - 19:20 | 6164811 mvsjcl
mvsjcl's picture

"...But if you ask for a rise,

It's no surprise that they're giving none away

away, away, away..."

Thu, 06/04/2015 - 21:04 | 6165133 THE 4th Quadrant
THE 4th Quadrant's picture

Raise? How can you get a raise if you have no job!?

Thu, 06/04/2015 - 19:30 | 6164854 Falling Down
Falling Down's picture

It's guVERMINt.

Thu, 06/04/2015 - 18:37 | 6164617 Creepy A. Cracker
Creepy A. Cracker's picture

Six years of suck and some are just realizing that there is no "recovery?"  Did they run out of drug money?  Sobered up and saw the world as it really is?  Quit watching ObamaTV, turning on actual news? Started reading ZeroHedge.com?

Thu, 06/04/2015 - 18:09 | 6164573 Say What Again
Say What Again's picture

Complain, Complain.  If you're not happy with your current job, we can give it to one or our colleagues with a H-1B status that we just brought in from India or China.  We have many houses all over the country jammed with 20 or more of these highly motivated workers just waiting to take your job.

Arbeit macht frei

Thu, 06/04/2015 - 18:04 | 6164553 LibertarianMenace
LibertarianMenace's picture

It would suck even more if the contrarian facts, so-called, were even more widespread. A 5.5% UE rate calculated alongside 95 million non-participating members of the labor force should explain it all to everyone. Everyone apparently, but the poor sod(s) at WSJ that either wrote or served as economic references for this article.

Thu, 06/04/2015 - 18:08 | 6164571 BKbroiler
BKbroiler's picture

Met a cutie last night.  She gave me a raise.  Quite embarassing, but beyond my control.

Fri, 06/05/2015 - 07:09 | 6165940 LibertarianMenace
LibertarianMenace's picture

Let's hope for your sake it was at least 3.5% off the low.

Thu, 06/04/2015 - 18:05 | 6164556 Rikky
Rikky's picture

That means you're only losing purchasing power at a lower rate than most others.  Factor in the bevy of taxes and health insurance and there goes your 3.5% and then some.

Thu, 06/04/2015 - 17:05 | 6164372 Edward Quince
Edward Quince's picture

I can assure you that massive growth is right around the corner. Now get back to work.

Thu, 06/04/2015 - 17:06 | 6164373 goldhedge
goldhedge's picture

For the "Greater Good"

 

u fuking idiots.

Thu, 06/04/2015 - 17:06 | 6164375 Rehab Willie
Rehab Willie's picture

The only people getting any NEW money are the .01% & the .99% that work for the .01%.

The 99% can only HOPE that CHANGEs.

Thu, 06/04/2015 - 17:10 | 6164378 B2u
B2u's picture

Hey, who cares about the non-supervisory workers.  They don't do any work.  That's why they don't get much...

Thu, 06/04/2015 - 17:10 | 6164384 yellowsub
yellowsub's picture

the global clothing retailer I work for is performing a 5% workforce reduction this week.  Was shocked at some of my team members that selected due to outsourcers replacing their function.  Saw lots of mgmt being laid off so it's time for my raise unless they outsource me next round.

Thu, 06/04/2015 - 17:17 | 6164414 Bighorn_100b
Bighorn_100b's picture

Just wait for work share Friday's. Every other week you stay home and no pay.

It's time to look for another job! Trust me!

Thu, 06/04/2015 - 17:09 | 6164387 Bighorn_100b
Bighorn_100b's picture

Only minimum wage people get a raise. Everyone else gets maybe a cost of living wage increase if your lucky. Shrink that middle class. Middle class is on life support. IMO.

Thu, 06/04/2015 - 17:17 | 6164413 lehmen_sisters
lehmen_sisters's picture

On a positive note, Ag keeps dropping after hours. I'm expecting a large turnout at the bullion dealer in the AM.

Thu, 06/04/2015 - 17:20 | 6164422 Zen Master
Zen Master's picture

Robust jobs market? You fucking kidding me? The average job opening for a white collar middle management position in invetment banking is generating hundreds of applicants.

A friend of mine looking for a job at an investment bank was told by her head hunter that they recieve on average more than 700 resume's per job they advertise.

That's not a jobs market...it's a jobs "auction"...and the corps are bidding DOWN!

 

Thu, 06/04/2015 - 17:27 | 6164430 Bighorn_100b
Bighorn_100b's picture

It's not what you know, but who you know. Nothing has changed over the years. Of course you knew that already. Duh.

Thu, 06/04/2015 - 17:26 | 6164425 OMG
OMG's picture

OT anyway:

 

US officials: Massive breach of federal personnel data WASHINGTON (AP) — The Associated Press has learned that the Obama administration is scrambling to assess the impact of a massive data breach involving the agency that handles security clearances and employee records.

A congressional aide familiar with the situation, who declined to be named because he was not authorized to discuss it, says the Office of Personnel Management and the Interior Department were hacked. A second U.S. official who also declined to be identified said the data breach could potentially affect every federal agency.

The White House was considering a public announcement of the breach Thursday night or Friday morning, the second official said.

The Office of Personnel Management is the human resources department for the federal government, and issues security clearances

 

Source

Thu, 06/04/2015 - 17:39 | 6164477 Dead Man Walking
Dead Man Walking's picture

being in the computer security biz i can tell you this with confidence:

1. The federal govt has much lower grade security practices that banks or pharma. pharma is usually the best.

2. In my experience, the army had the worst i've ever seen.

 

Thu, 06/04/2015 - 17:23 | 6164432 Karaio
Karaio's picture

You want your child with a good job after college?

Tell the kid to enlist in the Navy.

Give a way for it to be placed as attache in Paraguay (to assist the Navy in that country).

Ready!

The best job in the world!

Kkkkkkkkkkkkkkkkkkkkkkkk!

Thu, 06/04/2015 - 17:28 | 6164447 negative rates
negative rates's picture

I had kids just to put a load on them, one day throw down my double root canal on um. Now I might have more and put the load on the gvt, they are good at handling loads.

Thu, 06/04/2015 - 17:27 | 6164435 JRobby
JRobby's picture

Suddenly?

We have been ass fucked since 1980 when "deregulation" & "trickle down" was the "fashion". Tired of just a plain old ass fucking, now they ram it to us with implements of all sorts with nifty names: QE, TARP, HAMP, DHS, TSA etc. etc........

Thu, 06/04/2015 - 17:31 | 6164458 Bell's 2 hearted
Bell's 2 hearted's picture

TPP to the Rescue!

 

j/k

Thu, 06/04/2015 - 17:25 | 6164439 JenkinsLane
JenkinsLane's picture

The theory of macroeconomics has not evolved from the pre-NAFTA, pre-free trade, pre-globalisation period.

Thu, 06/04/2015 - 17:36 | 6164467 Bell's 2 hearted
Bell's 2 hearted's picture

... has evolved into "parroting whatever the folks who pay me want to say"

Thu, 06/04/2015 - 17:28 | 6164445 LetsGetPhysical
LetsGetPhysical's picture

Don't worry there's a horde of illegal Mexicans that will work for 25 cents on the dollar. 

Thu, 06/04/2015 - 17:28 | 6164448 Bell's 2 hearted
Bell's 2 hearted's picture

1) can't talk UE rate without discussing (dropping like a stone) participaton rate

reeses pieces

 

2) low wage jobs susceptible to automation / offshoring / outsourcing at the first whiff of "uppityness"

Thu, 06/04/2015 - 18:49 | 6164711 Monty Burns
Monty Burns's picture

..and wetbacks storming over the border. God help a low-skilled White male in America today.

Thu, 06/04/2015 - 17:31 | 6164455 Hubbs
Hubbs's picture

The CEO's took it.

Thu, 06/04/2015 - 17:42 | 6164487 Dead Man Walking
Dead Man Walking's picture

H1-b visa's have a play here. Ask disney IT folks, and many others.

Thu, 06/04/2015 - 17:44 | 6164495 kchrisc
kchrisc's picture

"Where's My Raise?"
In Zion.

"Where's my future?"
In Zion's boot.

Liberty is a demand. Tyranny is submission..

 

"I went to work, and all I got was this T-Shirt. Zion got the rest."

Thu, 06/04/2015 - 18:25 | 6164609 BKbroiler
BKbroiler's picture

Liberty is a demand. Tyranny is submission..

Can you imagine hanging out with someone who ended all their sentences with the same catch phrase?  Yeah.. that would suck.  You can't force a meme, homie.  

Thu, 06/04/2015 - 17:49 | 6164504 Cycle
Cycle's picture

The famous Rubin strong dollar policy allowed for a great ROI for US banksters invested in developing countries, while gutting American manufacturing. Oh, and when they overshot their mark and risked default, we bailed them with Brady Bonds, backstopped the Russian default, etc. etc. Meanwhile Paul Krugman opined on the benefits of "free trade," comparative advantage, "The New Economy" etc. Free trade in the setting of a mercantilist monetary policy which in the old days might have caused a war, mercantilist attacks on US trade were then, and now (TPP) supported by the American architects of the New Economy. Fookin' mess.

Thu, 06/04/2015 - 17:52 | 6164518 Seasmoke
Seasmoke's picture

Public takers keep getting fucking raises. It's in some colluded contract or for the children. Scumbags. 

Thu, 06/04/2015 - 17:53 | 6164522 Jack of All Trades
Jack of All Trades's picture

Is this Recovery Summer 6 or 7??  I seem to have lost track b/c they all end up being phantom recoveries.

Thu, 06/04/2015 - 19:24 | 6164836 Dre4dwolf
Dre4dwolf's picture

Well, since officially we have been in a recovery for like 10 years almost . . . I think its safe to say at this point that the real recovery isn't coming. 

No one actually believes this bullshit about "recovery" 

The worker is hurting.

If the worker is hurting, America is hurting.

 

Wallsteet has nothing to do with America, its pretty much the most  Un-American thing in this country at this point, if the Dow goes up to 90,000 points because of Fed Funny Money, that wont help one god-damned soul in this country, even the bankers can't benefit anymore because there is nothing left for them to steal anyway . . .  more zeros do nothing for them its all trivial at this point... nothing for them to gain.

 

 

Thu, 06/04/2015 - 17:58 | 6164526 Bill of Rights
Bill of Rights's picture

Here's your raise

....../´¯/)
....................,/¯../
.................../..../
............./´¯/'...'/´¯¯`·¸
........../'/.../..../......./¨¯\
........('(...´...´.... ¯~/'...')
.........\.................'...../
..........''...\.......... _.·´
............\..............(
..............\.............\...

Thu, 06/04/2015 - 18:15 | 6164585 Super Hans
Super Hans's picture

July 11, 2015 I get a 5 cent raise! I will then make 7.35 per hour!

I should be thankfull to average just above 30 hours per week of back breaking work in a Kroger Meat Dept!

I have no Beni's after 4 months!  I tried to call in sick the other day, and my manager told me that I would need to speak to the store manager. I called the store manager and he basically shamed me for needing time off due to illness, so I came to work, not to help him, but because I did not want to let the other closer down.  What kind of company treats their people like this?

At this point, Im just working here for the experience; to see what life is really like for a middle aged, educated American.

The other day I completed our 2015 employee survey endosed by the current Kroger CEO.

I said, that a customer first employee last business model is not sustainable.

At this point who cares!

The only Kroger employees that get full time work are the dept. managers, or those that have worked at kroger for 5+ years.

By aggrecate (spelling) the average work week per employee averages 29.5 hours per week.

 

SH

 

 

Thu, 06/04/2015 - 18:51 | 6164722 Wigglesworth
Wigglesworth's picture

I promise as soon as you finish training Ravi we can talk about a raise.

Thu, 06/04/2015 - 18:58 | 6164753 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Where's your raise?

Transfered onto the gift VISA card of the sugar baby of a Wall Street parasite. She'll use it to amuse herself squandering "Daddy's" money on dresses, purses and pairs of shoes that each cost more than you spend on clothes in a year. One of the best-dressed girls at NYU.

Her "networking" skills will get a cushy middle-management job helping Daddy decide which poor and ugly white men can be shitcanned in favour of cheaper, more exotic and better-endowed H1B's. 

If you want a raise, about the only way to get it is to become a banker's favourite whore. Everything else can be outsourced.

Thu, 06/04/2015 - 19:20 | 6164816 Dre4dwolf
Dre4dwolf's picture

 

Its the Unions they steal all the $$$$ the worker gets nothing the employer cant afford to pay the worker more because the Union is already bloating his costs.

When the unions + workmans comp + government is bloating the cost of labor to employers by 70% there isn't much room left to pay workers more/give them better pay... because the money that would of went to better pay . . . went to buying the union bosses a new benzito and McMansion...... a union worker making "65$/hr" probably only takes home . . . 15~25$ an hour, which given todays inflation of rent + food + health care . . . is pretty much under poverty level wages.

If you are earning under 40$ an hour take home clean, you are at a poverty level of income.

Imagine if people who "earn 65$ an hour" got to keep 100% of their paycheck!

Thats what would happen if you got rid of unions Workman comp and all this garbage and just let people work.

 

You know why we:

-Went to the moon

-Built the san-fran bridge , the brooklyn bridge, the verrazano bridge, the empire state building, the world trade towers, won wwI and II, Hoover Dam, etc.. etc...

Because we didn't have red - tape.

 

People are meant to build bridges and fall to their death.

Its part of life history cant be made if you are so risk averse and bloat your expenses just to worry about "safety" which is complete bullshit anyway, if someone is gona fall off a bridge mid construction, no amount of caution tape and bullshit is going to prevent that, no amount of insurance and bullshit is going to prevent that, perpetually penalizing ourselves so that a few useless idiots can sit in an office doing nothing but writing huge bills to small businesses that are struggling to build america and survive . . . its just disgusting and its all bullshit , its bullshit like the way they sell us security while taking away our liberties / freedoms/ rights / privacy doing all that shit and slapping security cameras everywhere with footage no one ever watches does not do anything to boost "security" its just a theater, a bluff to sell us on the idea that we need to spend trillions a year on bullshit that people have no customers for.

If we had half the regulation we do today back in the 30s we probably would of never done half the shit this country thinks of as "great accomplishments".

 

Get Rid of the shit

Get rid of the taxes

Get rid of the insurance ponzi schemes

Get rid of the stinking debt

and Leave us all the fuck alone so we can get shit done and make a few bucks in the process so we aren't perpetually pulling our hair out just to put food on the fucking table.

 

 

Thu, 06/04/2015 - 19:33 | 6164863 Solarman
Solarman's picture

I am an employer, and I have been giving all of my workers an annual 11% raise.  They just don't see it, as it is my increased Employer paid Healthcare and employer State cost increases. At the same time, they have taken an aggregate annual 5% reduction in spendable cash as their deductibles have doubled.  I pay 100% of the Insurance though.

 

 

 

 

Thu, 06/04/2015 - 19:35 | 6164868 847328_3527
847328_3527's picture

Raise? I'm hoping they don't cut our salaries another 10% which they have done twice already since 2008. Luckily, our health benefits haven't been slashed despite Barry's devastating Obamacare.

Thu, 06/04/2015 - 20:20 | 6165009 q99x2
q99x2's picture

I think there are too many people. There weren't this many people when I got here. None of my colleagues were doing anything for half my lifetime. Bunch of lazy bastards who invited them here anyhow.

Thu, 06/04/2015 - 21:31 | 6165217 bid the soldier...
bid the soldiers shoot's picture

hello recovery

 

U.S. Census Bureau U.S. Bureau of Economic Analysis NEWS U.S. Department of Commerce * Washington, DC 20230 U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES April 2015
April imports were $230.8 billion, $7.8 billion less than March imports.

So we're in a recovery and the dollar is higher than a kite and April imports were $7.8 bllion less than March's.
Any questions?

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