Certainly No Sign in March of Excessive Wage Growth Which Would Trigger Inflation
Average hourly wages of private sector workers and of production/nonsupervisory both dropped slightly in March. The chart shows year-over-year growth in hourly wages for both groups. Both are seeing growth rates far below what they were seeing before the recession started, and the “all private sector employees” series has seen no increase whatsoever in nearly three years. In recent months, many commentators have, perhaps surprisingly, raised concerns that our labor market may be tightening enough to be causing excessive wage growth that would trigger inflation. There is no sign of that here. Instead, today’s jobs report shows there remains a tremendous amount of slack in the labor market, which shifts bargaining power away from workers and keeps wages low. Employers do not have to pay substantial wage increases to get and keep the workers they need when workers lack outside options.