Wage Growth is Accelerating

 

Average hourly earnings grew 2.8% in May 2018, the fastest since July 2009. Hourly and weekly earnings growth is rising for rank-and-file production and nonsupervisory workers. Workers are able to work more hours as business picks up, reflected by weekly earnings growth exceeding hourly earnings growth since early 2017. Since TCJA’s enactment, average hourly earnings for these workers have also started to climb.

More Raises, Fewer Paycuts

For small businesses, the National Federation of Independent Business (NFIB) Jobs Report indicates a record high 35% more are raising worker pay. According to the National Association of Business Economists (NABE) Business Conditions Survey, 55% more companies are raising rather than lowering worker pay, nearing its record high.

As Businesses Invest, Productivity and Wage Growth Will Follow

Capital investment helps workers be more productive, which in turn fuels sustainable wage growth. Actual business investment is experiencing positive and rising growth after contracting for most of 2016, according to Bureau of Economic Analysis (BEA) data. A survey of businesses conducted by Duke’s Fuqua School of Business/CFO Magazine indicates that expected capital expenditures (capex) over the next 12 months increased markedly since the enactment of TCJA.