What to Watch on Jobs Day: Will we see signs of stronger wage growth?

Friday is the last Bureau of Labor Statistics (BLS) Jobs Report before the final meeting of the year for the Federal Open Market Committee (FOMC) meeting. The FOMC has a dual mandate to pursue both maximum employment as well as stable inflation around their 2 percent target. Current forecasts signal that it’s more likely than not that the FOMC will raise interest rates in their December meeting, on pace with their behavior this year so far. However, the data, should give them pause to hold off and let the economy continue to recover—and the data they should really be paying attention to comes from the labor market, not the stock market.

While the economy is experiencing continued low unemployment, there’s other evidence to suggest that recent levels of unemployment are overstating the strength of the economy. The share of the population with a job continues to be softer than recent labor market peaks. The figure below shows the share of the 25–54 year old population with a job, removing any issues of a shrinking labor force due to retiring baby boomers. This prime-age employment-to-population ratio most recently came in at 79.7 percent, a huge improvement since the depths of the aftermath of the Great Recession, but still more than 2 percentage points lower than when the economy was closest to full employment back in 2000.

Figure A

Employment-to-population ratio of workers ages 25-54, 1989–2018

date Employment to population ratio 
Jan-1989 80.0%
Feb-1989 79.9
Mar-1989 79.9
Apr-1989 79.8
May-1989 79.8
Jun-1989 79.8
Jul-1989 79.8
Aug-1989 79.9
Sep-1989 80
Oct-1989 79.9
Nov-1989 80.2
Dec-1989 80.1
Jan-1990 80.2
Feb-1990 80.2
Mar-1990 80.1
Apr-1990 79.9
May-1990 79.9
Jun-1990 79.8
Jul-1990 79.6
Aug-1990 79.5
Sep-1990 79.4
Oct-1990 79.4
Nov-1990 79.2
Dec-1990 79
Jan-1991 78.9
Feb-1991 78.9
Mar-1991 78.7
Apr-1991 79
May-1991 78.6
Jun-1991 78.7
Jul-1991 78.6
Aug-1991 78.5
Sep-1991 78.6
Oct-1991 78.5
Nov-1991 78.4
Dec-1991 78.3
Jan-1992 78.4
Feb-1992 78.2
Mar-1992 78.2
Apr-1992 78.4
May-1992 78.4
Jun-1992 78.5
Jul-1992 78.4
Aug-1992 78.4
Sep-1992 78.3
Oct-1992 78.2
Nov-1992 78.2
Dec-1992 78.2
Jan-1993 78.2
Feb-1993 78.1
Mar-1993 78.2
Apr-1993 78.2
May-1993 78.5
Jun-1993 78.6
Jul-1993 78.6
Aug-1993 78.8
Sep-1993 78.6
Oct-1993 78.7
Nov-1993 79
Dec-1993 79
Jan-1994 78.9
Feb-1994 78.9
Mar-1994 78.9
Apr-1994 79
May-1994 79.2
Jun-1994 78.8
Jul-1994 79.1
Aug-1994 79.2
Sep-1994 79.6
Oct-1994 79.6
Nov-1994 79.8
Dec-1994 79.8
Jan-1995 79.7
Feb-1995 80
Mar-1995 79.9
Apr-1995 79.8
May-1995 79.7
Jun-1995 79.5
Jul-1995 79.7
Aug-1995 79.6
Sep-1995 79.8
Oct-1995 79.8
Nov-1995 79.7
Dec-1995 79.7
Jan-1996 79.8
Feb-1996 79.9
Mar-1996 79.9
Apr-1996 79.9
May-1996 80
Jun-1996 80.1
Jul-1996 80.4
Aug-1996 80.5
Sep-1996 80.4
Oct-1996 80.6
Nov-1996 80.5
Dec-1996 80.5
Jan-1997 80.5
Feb-1997 80.4
Mar-1997 80.6
Apr-1997 80.7
May-1997 80.6
Jun-1997 80.9
Jul-1997 81.1
Aug-1997 81.3
Sep-1997 81.1
Oct-1997 81.1
Nov-1997 81
Dec-1997 81
Jan-1998 81
Feb-1998 81
Mar-1998 81
Apr-1998 81.1
May-1998 81
Jun-1998 81
Jul-1998 81.1
Aug-1998 81.2
Sep-1998 81.3
Oct-1998 81.1
Nov-1998 81.2
Dec-1998 81.3
Jan-1999 81.8
Feb-1999 81.5
Mar-1999 81.3
Apr-1999 81.3
May-1999 81.4
Jun-1999 81.4
Jul-1999 81.2
Aug-1999 81.3
Sep-1999 81.3
Oct-1999 81.5
Nov-1999 81.6
Dec-1999 81.5
Jan-2000 81.8
Feb-2000 81.8
Mar-2000 81.7
Apr-2000 81.9
May-2000 81.5
Jun-2000 81.5
Jul-2000 81.3
Aug-2000 81.1
Sep-2000 81.1
Oct-2000 81.1
Nov-2000 81.3
Dec-2000 81.4
Jan-2001 81.4
Feb-2001 81.3
Mar-2001 81.3
Apr-2001 80.9
May-2001 80.8
Jun-2001 80.6
Jul-2001 80.5
Aug-2001 80.2
Sep-2001 80.2
Oct-2001 79.9
Nov-2001 79.7
Dec-2001 79.8
Jan-2002 79.6
Feb-2002 79.8
Mar-2002 79.6
Apr-2002 79.5
May-2002 79.4
Jun-2002 79.2
Jul-2002 79.1
Aug-2002 79.3
Sep-2002 79.4
Oct-2002 79.2
Nov-2002 78.8
Dec-2002 79
Jan-2003 78.9
Feb-2003 78.9
Mar-2003 79
Apr-2003 79.1
May-2003 78.9
Jun-2003 78.9
Jul-2003 78.8
Aug-2003 78.7
Sep-2003 78.6
Oct-2003 78.6
Nov-2003 78.7
Dec-2003 78.8
Jan-2004 78.9
Feb-2004 78.8
Mar-2004 78.7
Apr-2004 78.9
May-2004 79
Jun-2004 79.1
Jul-2004 79.2
Aug-2004 79
Sep-2004 79
Oct-2004 79
Nov-2004 79.1
Dec-2004 78.9
Jan-2005 79.2
Feb-2005 79.2
Mar-2005 79.2
Apr-2005 79.4
May-2005 79.5
Jun-2005 79.2
Jul-2005 79.4
Aug-2005 79.6
Sep-2005 79.4
Oct-2005 79.3
Nov-2005 79.2
Dec-2005 79.3
Jan-2006 79.6
Feb-2006 79.7
Mar-2006 79.8
Apr-2006 79.6
May-2006 79.7
Jun-2006 79.8
Jul-2006 79.8
Aug-2006 79.8
Sep-2006 79.9
Oct-2006 80.1
Nov-2006 80
Dec-2006 80.1
Jan-2007 80.3
Feb-2007 80.1
Mar-2007 80.2
Apr-2007 80
May-2007 80
Jun-2007 79.9
Jul-2007 79.8
Aug-2007 79.8
Sep-2007 79.7
Oct-2007 79.6
Nov-2007 79.7
Dec-2007 79.7
Jan-2008 80
Feb-2008 79.9
Mar-2008 79.8
Apr-2008 79.6
May-2008 79.5
Jun-2008 79.4
Jul-2008 79.2
Aug-2008 78.8
Sep-2008 78.8
Oct-2008 78.4
Nov-2008 78.1
Dec-2008 77.6
Jan-2009 77
Feb-2009 76.7
Mar-2009 76.2
Apr-2009 76.2
May-2009 75.9
Jun-2009 75.9
Jul-2009 75.8
Aug-2009 75.6
Sep-2009 75.1
Oct-2009 75
Nov-2009 75.2
Dec-2009 74.8
Jan-2010 75.1
Feb-2010 75.1
Mar-2010 75.1
Apr-2010 75.4
May-2010 75.1
Jun-2010 75.2
Jul-2010 75.1
Aug-2010 75
Sep-2010 75.1
Oct-2010 75
Nov-2010 74.8
Dec-2010 75
Jan-2011 75.2
Feb-2011 75.1
Mar-2011 75.3
Apr-2011 75.1
May-2011 75.2
Jun-2011 75
Jul-2011 75
Aug-2011 75.1
Sep-2011 74.9
Oct-2011 74.9
Nov-2011 75.3
Dec-2011 75.4
Jan-2012 75.5
Feb-2012 75.5
Mar-2012 75.7
Apr-2012 75.7
May-2012 75.7
Jun-2012 75.6
Jul-2012 75.6
Aug-2012 75.7
Sep-2012 76
Oct-2012 76.1
Nov-2012 75.8
Dec-2012 76
Jan-2013 75.6
Feb-2013 75.8
Mar-2013 75.8
Apr-2013 75.8
May-2013 76
Jun-2013 75.9
Jul-2013 76
Aug-2013 76
Sep-2013 76
Oct-2013 75.6
Nov-2013 76.1
Dec-2013 76.1
Jan-2014 76.4
Feb-2014 76.4
Mar-2014 76.6
Apr-2014 76.5
May-2014 76.4
Jun-2014 76.9
Jul-2014 76.7
Aug-2014 76.8
Sep-2014 76.8
Oct-2014 76.9
Nov-2014 76.9
Dec-2014 77.1
Jan-2015 77.1
Feb-2015 77.2
Mar-2015 77.2
Apr-2015 77.2
May-2015 77.2
Jun-2015 77.4
Jul-2015 77.1
Aug-2015 77.2
Sep-2015 77.2
Oct-2015 77.2
Nov-2015 77.4
Dec-2015 77.4
Jan-2016 77.7
Feb-2016 77.8
Mar-2016 78
Apr-2016 77.8
May-2016 77.8
Jun-2016 77.9
Jul-2016 77.9
Aug-2016 77.8
Sep-2016 78
Oct-2016 78.2
Nov-2016 78.1
Dec-2016 78.1
Jan-2017 78.2
Feb-2017 78.4
Mar-2017 78.5
Apr-2017 78.6
May-2017 78.4
Jun-2017 78.6
Jul-2017 78.6
Aug-2017 78.4
Sep-2017 78.9
Oct-2017 78.9
Nov-2017 79
Dec-2017 79.1
Jan-2018 79
Feb-2018 79.3
Mar-2018 79.2
Apr-2018 79.2
May-2018 79.2
Jun-2018 79.3
Jul-2018 79.5
Aug-2018 79.3
Sep-2018 79.3
Oct-2018 79.7
Nov-2018 79.7
ChartData Download data

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Source: EPI analysis of Bureau of Labor Statistics' Current Population Survey public data

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As the economy continued to improve, not only did unemployment fall precipitously, but the share of workers (re)entering the labor force continued to rise. As it turns out (and what we’ve long argued), workers have not been permanently sidelined from the Great Recession, but have systematically been returning to the labor market in search of opportunities. Over the last few years, the newly employed have been coming both from the ranks of the unemployed as well as from outside the labor force, those who were not actively seeking work the month prior to finding a job. In fact, the share of newly employed workers who did not look for work the previous month is at a historic high. Over 7-in-10 newly employed workers are coming from out of the labor force. Clearly, these sidelined workers wanted jobs, yet another indication that the unemployment rate is understating the extent of slack or job searchers compared to previous periods.

Figure B

Share of newly employed workers who said that they were not actively searching for work in the previous month

Share of newly employed workers who said that they were not actively searching for work in the previous month
Apr-1990 0.619%
May-1990 0.626
Jun-1990 0.620
Jul-1990 0.620
Aug-1990 0.616
Sep-1990 0.623
Oct-1990 0.610
Nov-1990 0.612
Dec-1990 0.604
Jan-1991 0.599
Feb-1991 0.590
Mar-1991 0.585
Apr-1991 0.577
May-1991 0.576
Jun-1991 0.572
Jul-1991 0.580
Aug-1991 0.578
Sep-1991 0.577
Oct-1991 0.573
Nov-1991 0.569
Dec-1991 0.570
Jan-1992 0.568
Feb-1992 0.571
Mar-1992 0.571
Apr-1992 0.572
May-1992 0.573
Jun-1992 0.566
Jul-1992 0.564
Aug-1992 0.561
Sep-1992 0.559
Oct-1992 0.557
Nov-1992 0.558
Dec-1992 0.561
Jan-1993 0.566
Feb-1993 0.577
Mar-1993 0.583
Apr-1993 0.584
May-1993 0.582
Jun-1993 0.581
Jul-1993 0.575
Aug-1993 0.575
Sep-1993 0.580
Oct-1993 0.589
Nov-1993 0.585
Dec-1993 0.583
Jan-1994 0.588
Feb-1994 0.592
Mar-1994 0.591
Apr-1994 0.587
May-1994 0.583
Jun-1994 0.585
Jul-1994 0.586
Aug-1994 0.590
Sep-1994 0.591
Oct-1994 0.598
Nov-1994 0.601
Dec-1994 0.603
Jan-1995 0.604
Feb-1995 0.595
Mar-1995 0.597
Apr-1995 0.597
May-1995 0.592
Jun-1995 0.595
Jul-1995 0.595
Aug-1995 0.600
Sep-1995 0.602
Oct-1995 0.599
Nov-1995 0.606
Dec-1995 0.599
Jan-1996 0.598
Feb-1996 0.603
Mar-1996 0.607
Apr-1996 0.610
May-1996 0.607
Jun-1996 0.608
Jul-1996 0.615
Aug-1996 0.608
Sep-1996 0.609
Oct-1996 0.602
Nov-1996 0.606
Dec-1996 0.596
Jan-1997 0.591
Feb-1997 0.589
Mar-1997 0.603
Apr-1997 0.614
May-1997 0.618
Jun-1997 0.611
Jul-1997 0.604
Aug-1997 0.613
Sep-1997 0.619
Oct-1997 0.625
Nov-1997 0.627
Dec-1997 0.628
Jan-1998 0.633
Feb-1998 0.627
Mar-1998 0.629
Apr-1998 0.624
May-1998 0.635
Jun-1998 0.632
Jul-1998 0.642
Aug-1998 0.640
Sep-1998 0.652
Oct-1998 0.651
Nov-1998 0.651
Dec-1998 0.649
Jan-1999 0.656
Feb-1999 0.655
Mar-1999 0.642
Apr-1999 0.653
May-1999 0.661
Jun-1999 0.674
Jul-1999 0.664
Aug-1999 0.657
Sep-1999 0.653
Oct-1999 0.655
Nov-1999 0.653
Dec-1999 0.651
Jan-2000 0.644
Feb-2000 0.654
Mar-2000 0.657
Apr-2000 0.659
May-2000 0.656
Jun-2000 0.659
Jul-2000 0.654
Aug-2000 0.655
Sep-2000 0.656
Oct-2000 0.665
Nov-2000 0.674
Dec-2000 0.681
Jan-2001 0.690
Feb-2001 0.686
Mar-2001 0.679
Apr-2001 0.669
May-2001 0.658
Jun-2001 0.653
Jul-2001 0.657
Aug-2001 0.662
Sep-2001 0.666
Oct-2001 0.655
Nov-2001 0.644
Dec-2001 0.629
Jan-2002 0.626
Feb-2002 0.623
Mar-2002 0.617
Apr-2002 0.619
May-2002 0.628
Jun-2002 0.644
Jul-2002 0.645
Aug-2002 0.640
Sep-2002 0.631
Oct-2002 0.631
Nov-2002 0.637
Dec-2002 0.641
Jan-2003 0.642
Feb-2003 0.642
Mar-2003 0.645
Apr-2003 0.643
May-2003 0.637
Jun-2003 0.635
Jul-2003 0.631
Aug-2003 0.632
Sep-2003 0.634
Oct-2003 0.643
Nov-2003 0.647
Dec-2003 0.637
Jan-2004 0.636
Feb-2004 0.634
Mar-2004 0.649
Apr-2004 0.643
May-2004 0.643
Jun-2004 0.637
Jul-2004 0.642
Aug-2004 0.645
Sep-2004 0.641
Oct-2004 0.642
Nov-2004 0.640
Dec-2004 0.644
Jan-2005 0.646
Feb-2005 0.648
Mar-2005 0.649
Apr-2005 0.651
May-2005 0.658
Jun-2005 0.661
Jul-2005 0.666
Aug-2005 0.659
Sep-2005 0.665
Oct-2005 0.662
Nov-2005 0.660
Dec-2005 0.659
Jan-2006 0.658
Feb-2006 0.673
Mar-2006 0.673
Apr-2006 0.676
May-2006 0.673
Jun-2006 0.672
Jul-2006 0.667
Aug-2006 0.664
Sep-2006 0.659
Oct-2006 0.669
Nov-2006 0.676
Dec-2006 0.683
Jan-2007 0.680
Feb-2007 0.670
Mar-2007 0.665
Apr-2007 0.658
May-2007 0.662
Jun-2007 0.676
Jul-2007 0.677
Aug-2007 0.676
Sep-2007 0.669
Oct-2007 0.670
Nov-2007 0.675
Dec-2007 0.666
Jan-2008 0.664
Feb-2008 0.654
Mar-2008 0.656
Apr-2008 0.647
May-2008 0.651
Jun-2008 0.649
Jul-2008 0.653
Aug-2008 0.642
Sep-2008 0.629
Oct-2008 0.621
Nov-2008 0.619
Dec-2008 0.623
Jan-2009 0.622
Feb-2009 0.616
Mar-2009 0.608
Apr-2009 0.598
May-2009 0.596
Jun-2009 0.583
Jul-2009 0.575
Aug-2009 0.570
Sep-2009 0.568
Oct-2009 0.576
Nov-2009 0.567
Dec-2009 0.577
Jan-2010 0.579
Feb-2010 0.588
Mar-2010 0.587
Apr-2010 0.574
May-2010 0.564
Jun-2010 0.566
Jul-2010 0.572
Aug-2010 0.584
Sep-2010 0.588
Oct-2010 0.589
Nov-2010 0.589
Dec-2010 0.584
Jan-2011 0.591
Feb-2011 0.595
Mar-2011 0.601
Apr-2011 0.604
May-2011 0.602
Jun-2011 0.597
Jul-2011 0.598
Aug-2011 0.596
Sep-2011 0.606
Oct-2011 0.598
Nov-2011 0.598
Dec-2011 0.591
Jan-2012 0.592
Feb-2012 0.591
Mar-2012 0.594
Apr-2012 0.603
May-2012 0.609
Jun-2012 0.616
Jul-2012 0.618
Aug-2012 0.623
Sep-2012 0.623
Oct-2012 0.620
Nov-2012 0.618
Dec-2012 0.625
Jan-2013 0.622
Feb-2013 0.615
Mar-2013 0.616
Apr-2013 0.631
May-2013 0.635
Jun-2013 0.632
Jul-2013 0.623
Aug-2013 0.629
Sep-2013 0.635
Oct-2013 0.643
Nov-2013 0.641
Dec-2013 0.636
Jan-2014 0.639
Feb-2014 0.635
Mar-2014 0.639
Apr-2014 0.627
May-2014 0.640
Jun-2014 0.644
Jul-2014 0.660
Aug-2014 0.656
Sep-2014 0.654
Oct-2014 0.649
Nov-2014 0.654
Dec-2014 0.659
Jan-2015 0.673
Feb-2015 0.678
Mar-2015 0.684
Apr-2015 0.678
May-2015 0.682
Jun-2015 0.681
Jul-2015 0.690
Aug-2015 0.688
Sep-2015 0.688
Oct-2015 0.686
Nov-2015 0.688
Dec-2015 0.691
Jan-2016 0.689
Feb-2016 0.697
Mar-2016 0.704
Apr-2016 0.704
May-2016 0.693
Jun-2016 0.691
Jul-2016 0.691
Aug-2016 0.697
Sep-2016 0.692
Oct-2016 0.681
Nov-2016 0.679
Dec-2016 0.689
Jan-2017 0.697
Feb-2017 0.690
Mar-2017 0.687
Apr-2017 0.690
May-2017 0.697
Jun-2017 0.706
Jul-2017 0.704
Aug-2017 0.709
Sep-2017 0.704
Oct-2017 0.705
Nov-2017 0.710
Dec-2017 0.709
Jan-2018 0.715
Feb-2018 0.710
Mar-2018 0.706
Apr-2018 0.703
May-2018 0.707
Jun-2018 0.721
Jul-2018 0.729
Aug-2018 0.729
Sep-2018 0.727
Oct-2018 0.730
Nov-2018 0.733

 

ChartData Download data

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Note: Because of volatility in these data, the line reflects three month moving averages

Source: Bureau of Labor Statistics, Labor Force Flows: Unemployed to Employed (16 Years and Over) [LNS17100000], and Not in Labor Force to Employed (16 years and over) [LNS17200000], retrieved from FRED (Federal Reserve Bank of St. Louis).

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The lack of strong wage growth remains one of the clearest indications that the economy remains short of full employment. As shown below, nominal wage growth has shown some signs of life in the last couple of months, but year-over-year growth remains still below levels consistent with the Federal Reserve’s inflation target combined with long-term potential productivity growth, where it would be expected to be in a stronger economy. And, the Fed’s current path is intentionally keeping unemployment from dropping further and workers from getting any additional leverage to bid up their wages.

Figure C

Nominal wage growth has been far below target in the recovery: Year-over-year change in private-sector nominal average hourly earnings, 2007–2018

Date All nonfarm employees Production/nonsupervisory workers
Mar-2007 3.44% 4.11%
Apr-2007 3.13% 3.85%
May-2007 3.53% 4.14%
Jun-2007 3.61% 4.19%
Jul-2007 3.25% 4.05%
Aug-2007 3.35% 3.98%
Sep-2007 3.09% 4.15%
Oct-2007 3.03% 3.78%
Nov-2007 3.07% 3.83%
Dec-2007 2.92% 3.75%
Jan-2008 2.91% 3.80%
Feb-2008 2.85% 3.79%
Mar-2008 3.04% 3.83%
Apr-2008 2.89% 3.70%
May-2008 3.07% 3.69%
Jun-2008 2.67% 3.56%
Jul-2008 3.05% 3.67%
Aug-2008 3.33% 3.89%
Sep-2008 3.28% 3.64%
Oct-2008 3.32% 3.81%
Nov-2008 3.50% 3.91%
Dec-2008 3.59% 3.90%
Jan-2009 3.58% 3.72%
Feb-2009 3.43% 3.65%
Mar-2009 3.28% 3.47%
Apr-2009 3.37% 3.35%
May-2009 2.93% 3.06%
Jun-2009 2.88% 2.88%
Jul-2009 2.69% 2.76%
Aug-2009 2.44% 2.64%
Sep-2009 2.44% 2.75%
Oct-2009 2.53% 2.68%
Nov-2009 2.15% 2.67%
Dec-2009 1.96% 2.50%
Jan-2010 2.09% 2.66%
Feb-2010 2.09% 2.55%
Mar-2010 1.81% 2.27%
Apr-2010 1.81% 2.38%
May-2010 1.90% 2.59%
Jun-2010 1.76% 2.53%
Jul-2010 1.85% 2.42%
Aug-2010 1.75% 2.36%
Sep-2010 1.84% 2.19%
Oct-2010 1.93% 2.45%
Nov-2010 1.79% 2.13%
Dec-2010 1.79% 2.02%
Jan-2011 1.96% 2.28%
Feb-2011 1.83% 2.11%
Mar-2011 1.83% 2.06%
Apr-2011 1.87% 2.11%
May-2011 2.04% 2.10%
Jun-2011 2.13% 2.05%
Jul-2011 2.30% 2.26%
Aug-2011 1.95% 1.99%
Sep-2011 1.94% 1.99%
Oct-2011 2.07% 1.88%
Nov-2011 1.98% 1.82%
Dec-2011 2.02% 1.77%
Jan-2012 1.75% 1.35%
Feb-2012 1.79% 1.45%
Mar-2012 2.14% 1.76%
Apr-2012 2.09% 1.70%
May-2012 1.74% 1.39%
Jun-2012 1.96% 1.54%
Jul-2012 1.69% 1.39%
Aug-2012 1.86% 1.33%
Sep-2012 1.99% 1.54%
Oct-2012 1.51% 1.18%
Nov-2012 1.94% 1.48%
Dec-2012 2.11% 1.69%
Jan-2013 2.11% 1.89%
Feb-2013 2.19% 1.99%
Mar-2013 1.93% 1.88%
Apr-2013 2.01% 1.78%
May-2013 2.14% 1.93%
Jun-2013 2.13% 1.98%
Jul-2013 2.09% 2.03%
Aug-2013 2.26% 2.23%
Sep-2013 2.04% 2.12%
Oct-2013 2.25% 2.37%
Nov-2013 2.20% 2.32%
Dec-2013 1.90% 2.26%
Jan-2014 1.98% 2.21%
Feb-2014 2.23% 2.55%
Mar-2014 2.06% 2.30%
Apr-2014 1.97% 2.40%
May-2014 2.13% 2.44%
Jun-2014 2.05% 2.34%
Jul-2014 2.08% 2.33%
Aug-2014 2.21% 2.43%
Sep-2014 2.16% 2.33%
Oct-2014 2.03% 2.22%
Nov-2014 2.03% 2.26%
Dec-2014 1.99% 1.92%
Jan-2015 2.19% 2.06%
Feb-2015 1.93% 1.66%
Mar-2015 2.22% 1.95%
Apr-2015 2.22% 1.95%
May-2015 2.34% 2.14%
Jun-2015 2.17% 2.09%
Jul-2015 2.12% 1.99%
Aug-2015 2.24% 2.08%
Sep-2015 2.24% 2.03%
Oct-2015 2.52% 2.37%
Nov-2015 2.43% 2.12%
Dec-2015 2.56% 2.51%
Jan-2016 2.55% 2.40%
Feb-2016 2.38% 2.40%
Mar-2016 2.50% 2.54%
Apr-2016 2.61% 2.58%
May-2016 2.44% 2.33%
Jun-2016 2.56% 2.43%
Jul-2016 2.76% 2.62%
Aug-2016 2.47% 2.42%
Sep-2016 2.63% 2.56%
Oct-2016 2.70% 2.36%
Nov-2016 2.57% 2.40%
Dec-2016 2.65% 2.49%
Jan-2017 2.40% 2.35%
Feb-2017 2.72% 2.39%
Mar-2017 2.55% 2.24%
Apr-2017 2.51% 2.24%
May-2017 2.46% 2.33%
Jun-2017 2.50% 2.32%
Jul-2017 2.49% 2.22%
Aug-2017 2.60% 2.31%
Sep-2017 2.83% 2.59%
Oct-2017 2.28% 2.21%
Nov-2017 2.47% 2.35%
Dec-2017 2.66% 2.43%
Jan-2018 2.77% 2.43%
Feb-2018 2.57% 2.47%
Mar-2018 2.64% 2.60%
Apr-2018 2.64% 2.64%
May-2018 2.79% 2.73%
Jun-2018 2.78% 2.77%
Jul-2018 2.77% 2.77%
Aug-2018 2.96% 2.94%
Sep-2018 2.79% 2.79%
Oct-2018 3.10% 3.16%
Nov-2018 3.05% 3.24%
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*Nominal wage growth consistent with the Federal Reserve Board's 2 percent inflation target, 1.5 percent productivity growth, and a stable labor share of income.

Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series

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My colleagues, Josh Bivens and Ben Zipperer, recently published a useful short study on the importance of locking in full employment for the long haul. The whole report is useful, but I’m stealing a chart (see below) because it demonstrates just how important full employment is for realizing strong and broadly based wage growth. The dark bars represent average annual real (inflation-adjusted) wage growth in the late 1990s, the last experience with a persistently tight labor market. As you can see, real wage growth was strong and broad. The light blue bars represent wage growth since 1979 over all other years (except the late 1990s). The average annual growth in all those years was zero or worse for middle-and low-wage workers. The case is clear. Reaching genuine full employment should be the main concern of the FOMC so that workers across the wage distribution—white and black, young and old—see the benefits of tight labor markets in their job prospects and wages.

Figure D

The only period of high pressure in the labor market since 1979 led to rapid wage gains: Average annual wage growth from 1996–2001 vs. all other years between 1979 and 2017

Wage percentile All other post-1979 years 1996–2001
20th -0.15% 1.75%
Median -0.02% 1.66%
95th 1.01% 1.96%
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Note: Wage growth is inflation-adjusted.

Source: Authors’ calculations from data obtained from the State of Working America Data Library from the Economic Policy Institute (EPI 2018)

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