Economic Snapshot | Wages, Incomes, and Wealth

Wage growth slows to a crawl

Unemployment remained high at a rate of 9.1% in May 2011, but that is only one of many problems facing the labor market. In addition to this stubbornly high unemployment rate, wage growth has tumbled in the recession and its aftermath, falling from an annual growth rate of 3.8% in May 2007 to a rate of 1.8% in May 2011.  Average hourly wages were relatively flat in May (up 6 cents), a rate that has been treading water over the last year and which is far worse than before the recession started (see chart).  As for the concerns of inflation hawks, the trend in wage growth provides absolutely no cause for alarm.

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