We are in the final stretch of 2016! All told it’s been a good year. We have seen consistent economic growth that rivals pre-recession periods without an apparent bubble. If you have been paying attention to the Bureau of Labor Statistics’ monthly status reports, then you’re familiar with the trends. Most industries have experienced overall growth. The strongest gains have occurred in healthcare and professional and business services.
The economy is inching upward
It’s true, growth has been slower than one might hope. The rate of growth is not expected to change. According to Focus Economics, analysts predict that growth will be glacial for the rest of the year and only a little better in 2017. Yet, despite the slow boom, wages have not risen as quickly.
Wage growth is predicted to spur economic growth
Forbes reported earlier this year that earnings growth would need to beat estimates in order to encourage economic growth. In the same article, analysts predicted that rising personal income would spur consumer spending. However, the rise in income has not been enough to counter rising costs of living and wage growth does not seem as if it will beat projections.
Are wages really growing?
On paper, we have seen earnings rise consistently over the course of the year, if only by a few cents per month. However, when adjusted for inflation, those changes don’t add up to much. Wage stagnation is a real issue and appears to be a scar from the recession. During this period, companies cut headcount and wages while expecting workers to deliver more. They did. Productivity and educational attainment are at all time highs but so is wealth disparity.
Wages at work
No matter what your politics or opinion on fiscal policies, few would deny that a talent shortage has also persisted throughout the year. Many companies are reassessing their compensation packages to reflect the market value of their top employees. Conditions of employment in the United States are creating a perfect storm of turnover.
Fortune reports that full-time employees who jumped jobs in Q1 were able to increase their salaries by an average of 10%. Additionally, companies began to pay more to keep their top talent, especially Millennials. Millennials and Gen Z saw the highest percentage of wage increases. Don’t let this fool you, wealth in this age group is still at an all time low when you consider shifts in the economy and inflation.
What does this mean for you?
It is time to look at your compensation package. If you have not, you will fall behind. More and more people are realizing that the economy has made a recovery and want their wages to reflect that. Evaluating compensation does not necessarily mean that you will have to raise wages across the board. In order to know what you have to do, you need to know where you stand.