If You Like Your Stagnant Wages, You Can Keep Your Stagnant Wages

Tyler Durden's picture

Ever since the great recession of 2008/2009, economists have grown increasingly perplexed by the lack of real wage growth in the U.S. economy despite improving unemployment trends.  Even with a 4.4% unemployment rate, real wage growth has been elusive and hovered between negative 1% and positive 1% for years now.


Of course, it all could have something to do with the ~95 million people who have given up looking for jobs and/or the massive transition to part-time laborers in the Obamacare era, but we're just spitballing here.


Regardless of the reasons, according to a new survey from Aon Hewitt, the downward pressure on U.S. wage growth is unlikely to subside in 2018 with many employers saying their wage growth will be flat YoY.  Per the Wall Street Journal:

Businesses are planning to keep budgets for raises relatively flat in 2018, while continuing to devote more payroll dollars to performance-based pay, according to a survey of salary planning at 1,062 organizations conducted by consulting firm Aon Hewitt.


Despite low unemployment and increased competition for talent, companies are bearish on across-the-board pay raises, said Ken Abosch, an Aon Hewitt executive who works on the annual survey, now in its 41st year.


“Organizations are expressing reservations about the years coming and, for the first time since the recession, are signaling doubt or uncertainty about what they think their performance will look like in the coming year,” he said.

Moreover, in a move that will undoubtedly draw the ire of Bernie Sanders and his socialist followers, companies are increasingly saying that a higher percentage of their overall compensation will be dedicated to merit-based bonuses. 

Companies are paying to keep their highest performers happy and in place, with an average 12.5% of payroll going to incentive and bonus pay next year.


Overall, two-thirds of the organizations in the survey said they will use merit pay to show workers who’s doing a good job, and who could stand to improve. Of those companies, 40% said they would reduce or eliminate raises for low performers. And some high performers will have to work harder next year—15% of the companies changing merit pay say they will set more aggressive targets for bonuses and incentive pay.


Lindenwood University, a liberal-arts school near St. Louis, Mo., recently introduced a merit pay system for the school’s staff of 950. Previously, there was no formal structure for rewarding performance.


High performers get rewarded for their extra effort, said Dr. Deb Ayres, the university’s vice president of human resources. “They’re not getting the same small increases as everyone else. It’s very motivating for them.”

All of which is just a long way of confirming that "if you like your stagnant wages, you can keep your stagnant wages."

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dark pools of soros's picture

Zuckerclown will pay us all an honest wage to click his buttons

Five Star's picture

The average production worker now has to work over 111 hours to buy the same quantity of stocks that they could buy with less than 42 hours anytime before 1994. It's an all time record high. 


Bubba Rum Das's picture

"Even with a 4.4% unemployment rate..."

Laughable Tyler, just simply laughable; considering the fact that just 62% of working age Americans are employed full time...!

4.4% unemployed? What absolute Bullshit!

NoDebt's picture

"Lindenwood University, a liberal-arts school near St. Louis, Mo., recently introduced a merit pay system for the school’s staff of 950. Previously, there was no formal structure for rewarding performance.

High performers get rewarded for their extra effort, said Dr. Deb Ayres, the university’s vice president of human resources. “They’re not getting the same small increases as everyone else. It’s very motivating for them.”"

Those who do the best job teaching Communism get pay raises.


GunnerySgtHartman's picture

Talk about pay for performance, pay college professors a bonus based on how quickly their students find work in their chosen fields after graduation.

The social science departments at every college/university in the nation would have an absolute MELTDOWN with that.

ElTerco's picture

Now, now. HR departments are always on the lookout for clueless employees who don't understand the job descriptions they are hiring for.

ThirdWorldNut's picture

Left still supports globalization while claiming to support the working class, same globalization that has caused most of this misery for them.

Sometimes I wonder if these idiots can actually put two and two together. Or may be like an unruly/rebellious kid they just want to do whatever they are told not to.

Bobbyrib's picture

Yeah, Trump really cracked down on Globalization. He even makes his own clothing line in the US now! And W..W refused to sign ANY free trade agreement whatsoever. /sarcasm.

Katos's picture

companies are increasingly saying that a higher percentage of their overall compensation will be dedicated to merit-based bonuses. Foe the CEOS and senior staff of course!

Justin Case's picture

real wage growth has been elusive and hovered between negative 1% and positive 1% for years now.

It's been filled with debt, pulling future income forward. When rates return to normal, the economy will fall into a big fat recession and bankruptcies.

Joe Davola's picture

I wouldn't hold my breath waiting for rates to return to "normal".

canisdirus's picture

Rates can't return in our lifetimes. If they do, the entire system collapses.

Bobbyrib's picture

Rates have not normalized and the country is already heading into the depression within the depression.

Ben A Drill's picture

As long as we keep giving our tax dollars to the free shit nation nothing will change.

Free free free! Food stamps recharged every month. Check.

Why work when it's free.

Want more food stamps? Have a baby. Check.

Don't live here legally? Don't speak English? No job, no problem. Take this piece of plastic to the store and buy all the food you want. Check.

Need a cell phone? Need free housing? Need free health care? No problem. Check, check and double check.

America home of the free.

Philo Beddoe's picture

They print money for everybody these days. Well, not regular working people without public union pensions...but outside of those losers...everybody!

Faeriedust's picture

LOL.  You wouldn't believe how hard they have to work to get those free benefits.  The runaround is unbelievable.

Robert Trip's picture

Stagnant wages are what is keeping the millions of lazy motherfuckers afloat in this Nation.

In third world countries these lazy motherfuckers would be left in the streets to die.

Not here though. You have a "problem" or an "issue" you qualify for a FREE RIDE.

That's one of the main reasons our country is going down the tubes.

The other two are Women's Liberation and Integration.

But heaven forbid if those subjects are ever brought up for discussion.

StreetObserver's picture

I think that the feminist billionairesses should put their money where their mouths are and start "Affirmative Action Airlines", a fleet of planes that are exclusively maintained by minorities, the pilots are women and this is their only means of transportation said millionairess/Billionheiresses should use to fly around the world.

Kidbuck's picture

If by those who qualify for a free ride you include the fed and their leaders at Goldman sucks, then I agree with you.

Aubiekong's picture

LOL, I wish my wages were stagnant.  With real inflation running 10%+ each year my real wages are going down...

aloha_snakbar's picture

Its all good; at least Barky bin Obanana, the mulatto Kenyan faggot, still gets his pension, as well as obscene pay for play payments from when he was pretending to be a POTUS for eight years...

Vlad the Inhaler's picture

Basic stuff here.  Real wages = wages minus inflation.  When you create inflation by printing money instead of real productivity, then the benefits of inflation go mainly to the wealthy and the borrowers, while the costs of inflation are born mainly by the workers and the savers (plus the foreign holders of the currency).  In other words, the Wealth Effect is a certain kind of inflation, but the Fedspeak always refers to inflation as a uniform thing.

GunnerySgtHartman's picture

'Stagnant' wages?  My gross has declined by $5000 in the last five years, and that doesn't include non-existent inflation in food or health insurance.  And I know I'm not the only one in that boat.

Justin Case's picture

It's the root cause of growing poverty, stagnent wages and failed pension plans. This is just the begining. The economy was structured this way but the plan wasn't followed by the corporations.

Pensioners are going to be the next biggest growth in poverty class. NIRP has destroyed many pension plans and many fortune 500 companies aren't keeping up with contributions to those plans. Bonuses have gone up and the wage gap between laborer and management has passed 300:1. CEO of GM earns a base salary equivelent to 230 laborers earning $20.00 per hour working a full year. Then there are bonuses, health plan, car/insurance, expence acct., travel etc. 

Best way to help the poor is, don't become one of them.

Justin Case's picture

By far, the biggest category of discretionary spending is spending on the Pentagon and related military programs.

People's wages need to at least keep up with the real cost of living. If wages aren't keeping up, people can't afford to buy necessities or pay for housing. This creates the working poor. If wages stagnate then the number of poor will continue to grow. Everyone knows the fake numbers on inflation and BLS put out.

Here's a stat:

San Francisco once again claimed the highest rents statewide for both 1- and 2-bedroom units. A 1-bedroom in San Francisco costs $3,560 while 2-bedrooms had a median price of $4,730/mth.

Without affordable housing even the average person can't afford to rent. We have the same issue here in Toronto. If they can't afford to pay rent, then where do they live? In a cardboard box under the highway bridge? There are 10,000 people a day retiring in merica. Some might even get a pension from the company plan that they paid into most of their life. Most companies failed to contribute to those plans, under funded. Failed promises to retain workers. There will be thousands moar in poverty, b/c the pension deficit is in trillions under funded.

There is always money for the MIC.

Pernicious Gold Phallusy's picture

Welfare programs (Medicare, Social Security, Medicaid, Obamacare subsidies, EITC, Head Start, free school lunches, WIC) are vastly bigger in aggregate than military spending. They are also discretionary spending. Congress could cut the amount they spend on them with a vote.

Faeriedust's picture

False equivalence.  Social Security and Medicare are paid for by decades of having your salary sapped for the eventual payoff.  Medicaid, EITC, WIC, SNAP, etc. are not.  Don't lump in what is essentially a public pension plan with absolutely free giveaways (which are stupidly designed to encourage those who cannot or do not work to have MORE CHILDREN by providing benefits "for the children" at a per-head basis).  We need to stop encouraging the LEAST capable, physically and mentally, to reproduce!

21st.century's picture

well, not really--- SS taxes are-- and always were "general revenue to the Treasury" -- just exactly as the cynical, New Dealers wrote the law --  no "trust fund" was ever created

the ss law of 1935 only speaks about an "accounting" of the funds to occur --- you have no right to an SS check . those TAXES were spent-- like all taxes -- by vote-buying, cynical, corrupt politicians--- medicare was just tacked on to the payroll tax

oh, and that is what the 21st Century socialist want to do with "universal" medical insurance .... tack it onto payroll taxes -- more, more, more !

wonder how that will affect stagnant wages ?

Schlub's picture

Yep. FDR likened The New Deal to a "shoe box" that Uncle Sam would keep under his bed for you. People were just as gullible then as they are now.

21st.century's picture

right, as Canada lounges under the protective shield of OUR defense spending ? ya-goob .  Canada is too white -- you guys need more di-versity --- so stop complaining about the US

Toronto is one of the most expensive cities on Earth ... where will you house the 'fugees coming your way?

Luciferrigno's picture

Nothing at all to do with the attempted evisceration of unions and collective bargaining rights.

Kidbuck's picture

If unions were so great why didn't they take their pension funds and buy the companies their employees worked for? Never saw a union that didn't champion the least productive workers.

Deep Snorkeler's picture

A Booming Economy

1. low oil price

2. low interest rates

3. low tax rates

4. genius-level Silicon Valley technologies

What's the problem?

MoreFreedom's picture

The reason real wages are stagnant, is simply because government growth, and the costs to support that growth, exceeds any increases in productivity. 

Government is simply like a bunch of leeches sucking the blood from workers and producers.  What's been growing are the number and size of the leeches. 


Justin Case's picture

Corporations aren't investing in productivity. They spent the most money on share buy backs to keep earnings per share higher to meet bonus targets. IBM is the biggest corp in buy backs, and they earn a profit for borrowing, they get paid to borrow.

bkboy's picture

For anybody doubting MoreFreedom's opinion, consider this anecdote.  I know three IRS retirees who receive annual paychecks of $90k, $120K and $130k, respectively.  All they had were BS college degrees. These LIFETIME paychecks will increase each year by the COLA.  They also receive full medical and dental for LIFE.

Any actuary will tell you that $120k of income a year with today's interest rate is the same as having over $2,000,000 today.  To save $2,000,000 over a 35 year working life would have required additional income of over $65,000 to have enough left, after taxes, to create such a pot of money.  In other words, US taxpayers have grossly overpaid these three IRS employees (and are overpaying almost ALL government employees) by tens of thousands of dollars a year.

At least the millionaire next door who made it in the private sector did so by taking risks and usually creating jobs in the process.  All these three did, and millions like them, was suck the real producers' blood (and the real producers are all those who work in the private sector, not just the owners in the private sector) while squeezing even more blood out of the private sector to help fund their own paychecks.

Leeches indeed.  Yet they will be driving their golf carts around gated communities for another 25 years while the rest of us will likely end up in a trailer park and a soup line.

Faeriedust's picture

Yeah, Jamie Dimon and Martin Shrkeli and Mark Zuckerberg all work for the government, right?

Stan Smith's picture

Lots of people ignore (or are to stupid to notice), that since ObamaCare kicked in,  any theoretical "wage gains" are going straight to employees health care costs, not wages or salary.   And my guess this is across the board, regardless of income.  

When you squeeze everyone, it's not going to be good for the economy as a whole, regardless of share buy backs and cashed in stock options.

Dilluminati's picture

If I like my nonexistent benefits can I keep those also?

I'm young healthy, good lifestyle, can someone point me to an Obamacare exchange?

ElTerco's picture

"Businesses are planning to keep budgets for raises relatively flat in 2018, while continuing to devote more payroll dollars to performance-based pay"

Why not just say, "From this point forward, all revenues will be funneled to the CEO and his immediate sycophants." I say revenue rather than profit because debt-based stock buybacks will be in the mix.

Angry White Guy's picture

This is the one aspect of contemporary America that is literally slowly driving me insane.  Seems to me, that the 1% who doesn't actually WORK or PRODUCE keeps earning more and more while the rest of us WORK more, earn less, and hate our very existance.

I would normally say something must give but this kind of slavery has been the norm for half my life now, it's just become even more pronounced recently.

Between this economic reality along with the fact the country has become the White man-hating capital of the world, living in this country is a GD nightmere.

Wonderful country.

Faeriedust's picture

Might I suggest that you take up a trade in plumbing?  It looks like I will be paying a plumber $5,000 this week for three days' work and thanking him profusely on bended knee.  There's something about having raw sewage backing up in your home that makes a person willing to give anything to someone who can rescue them.

Don't mistake me.  It's not an easy job.  It's dirty, nasty, and back-breaking.  You can't entirely set your own hours as the best money comes from emergency work, which is always 2 am on Sunday.  After a blizzard.  But you can take vacations (and afford them!).  You can start small, as a bit of a sideline, and work your way up as you buy more and fancier tools. Most important, you can be your own boss, without any kind of a degree or the attendant debt.  Just answer the desperate phone calls, show up, fix the problem, and pocket the check. In a couple of years, you'll be rich enough to attract a wife.  Maybe even afford kids.  And you can leave them, instead of a little cash or a college education, a working trade and a business that will provide them with a living when you're gone.

Again,  it's not an easy job.  But it's one of the few where you can still be your own master, make a decent living, and climb out of the rathole.  Think about it.

Angry White Guy's picture

I'm highly educated and have worked in IT for years.  If we could get the fucking .gov to stop enabling h1-b invasions I wouldn't have this problem.

I'm almost 40 and don't really feel like making a switch to poop patrol, but I get your point and it's valid.

I was thinking car mechanic.  Cars are a system just like computers and networks.

I don't want to be 50 bent over sludge.

21st.century's picture

so, then why not START taxing the spending of the 1% ?  why tolerate this last century tax code ... that taxes your wages ? 

the 1% will howl ... tax the spending of the -now tax exempt-- clinton charity /trust fund -- they spend a lot of money, you know ?

demand a better tax code (something like the FairTax) --- why not ?  it's a new century-- time for a new tax code

Mena Arkansas's picture

And yet somehow at bonus time the company will determine they really cannot afford to pay bonuses this year.

Something about having to rebuild the engines on the CEO's jet.

moonmac's picture

If you like your low wage McJob you can keep it. If you don't like it there's another one 2 minutes away at the next strip mall, shopping center or fast food joint.

21st.century's picture

Stanant wages .... but by all means let's keep the moronic , last century, UN-fair - 1930's payroll tax yoke on the working citizens of the US !

sure-- 2017 and we still have this ramshackle tax code , which is UN-fit to sustain a modern USA. Oh, they'll keep yapping about minimumn wages, and the "working poor"

as the Bernie socialists are right there at the end of the week ... taking their cut of the meager wages of citizens... keep that crummy payroll tax on their backs !

the thing is, raising the minumn wage national -- just means MORE payroll tax ... so, no benifit to the worker at all.

want to help the poor-- and every one for that matter --- then dump the New Deal, last century tax code