Economic Perspective: Good News for Low-Wage Workers

Downtown Raleigh, east of campus.


“Today’s program looks at good news for low wage workers. Mike, the news from the job market has generally been very good recently. However, one of the disappointments has been the slow improvement in worker pay. When we look at the wage gains for workers of different income levels, is it the same story that those at the top are doing better than those at the bottom?”


“Actually that has been the case, but recently it’s not. In fact, we’ve had a reverse of the old adage, ‘The rich are getting richer, and the poor are getting poorer,’ because the latest reading on wages shows that if you look at the lowest paid workers, their wages have been rising at about a five percent annual rate. If you look at the highest paid workers, their wage has been rising at a three percent annual rate. So lower paid people, although they’re still lower paid, are getting bigger boosts in their wages.”

“Now why is this? That’s the big question. Well, it obviously has to do with the tight labor market, and more specifically, a new study shows that the tightest part of today’s tight labor market is really for low-skilled workers. Businesses hire people of various skills, and what they’re finding is there aren’t just many low-skilled workers out there who don’t have jobs. So if you need low-skill workers in your business, you’re going to have to bid more for them, and that increases their pay.”

“Another factor is that many states have been increasing their minimum wage. As well, some companies, like Amazon’s been increasing their lowest wage. So all this is combining to really, really help low paid workers in this part of the economic cycle.”

Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in
the Department of Agricultural and Resource Economics at North Carolina State University who
teaches and writes on personal finance, economic outlook and public policy.


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