USA Today makes the mystery of stagnant wages a bit more mysterious than necessary. In an article today, it asks why wages for most workers have been stagnant even with the unemployment rate at a relatively low 4.5 percent. Well, real wages are actually growing now, at a rate of around 1.0 percent annually. Given the rise in health care costs and some necessary adjustments to get from reported productivity to what I call "usable productivity" (this reflects differences in deflators and the fact that you can't eat depreciation) this is about what we should expect. The story here seems to be that with current labor market conditions (weak unions and pressure from trade), most workers will only be in a position to see rising wages when the labor market has gotten fairly tight. It was not tight in the years 2000-2005, hence no wage gains. That's not very mysterious, but also not very good news for most workers.
--Dean Baker
