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HAPPY FOURTH

Americans really deserve this long weekend. A raise would be nice, too

AP Photo/Seth Wenig
Enjoy it.
Published This article is more than 2 years old.

To paraphrase economist Robert Solow, pay raises seem to be everywhere lately—except in the US government’s wage statistics. Retailers Walmart, Target, TJX, and IKEA have all announced plans to boost wages in recent months. And decisions to hike minimum wages in Seattle, Los Angeles, and a slew of other metro areas have piled up as well.

But wage growth continues to be downright sluggish, with a year-on-year increase of just 1.9%, according to the just-released US jobs report for June. That’s far below the pace one might expect given that we’ve had 57 consecutive months of job growth. For example, the last time unemployment was this low in early 2008, wages were rising about 3.8% annually. (The jobs report showed the US economy generated 223,000 jobs during the month as the unemployment rate fell to 5.3% from 5.5% in May.)

“We have to address the challenge of wage stagnation,” US Secretary of Labor Tom Perez told Quartz. “Real wage growth continues to be spotty. And that’s the unfinished business of this recovery.”

What makes the lack of wage increases so irritating for many Americans is that the workday has been getting longer. The most recent data from the American Time Use Survey showed that the average length of a working day was 7.8 hours in 2014, up from 7.6 hours in 2013.

And that comes on top of the fact that Americans work some of the longest hours among affluent countries. (Though they don’t put in anywhere near as many as the famously hard-working Koreans.)

Americans are also much more likely to work so-called strange hours—such as weekends or during the dead of night—than many of their counterparts in affluent countries.

It’s no coincidence that especially long hours in the US tend to be worked by skilled, salaried workers. Such workers have long been largely exempt from US regulations that would require that they be paid overtime for their efforts. Currently, any employee that makes more than $23,660 annually can be classified as a manager, making the worker ineligible for overtime pay—defined as 150% of their base wage.

Late last month, the Obama administration proposed changes to the law that would allow workers earning up to $50,440 to get overtime pay. The administration says the changes could effect up to 5 million American workers. The proposals, which could take months to finalize, are part of a renewed push by governments around the world to try to boost wage growth. Governments in the UK, Germany, Japan and the US have all made wage growth a priority over the last year, as they try to help their economies move to self-sustaining growth after years of relying on growth stimulated by central banking policies.

Perez said the overtime rule adjustment isn’t the only thing the administration is doing to help boost pay. He said the administration continues to focus on raising minimum wages at the federal level; increasing infrastructure spending to boost construction employment; and programs aimed at developing worker skills.

“I don’t think there’s one magic bullet,” he says. “What we’re doing is going to the plate and swinging the bat in many different ways.”

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