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Wage Growth - 3/5/15

The ongoing economic expansion is lifting the fortunes of a growing number of segments, including the U.S. apartment market, state and local government spending and tourism.  Complete recovery continues to elude a number of other segments, however, including the single family housing market.  Significant wage growth remains another major missing piece. 

According to writer David Leonhardt, the average hourly wage of all private sector workers, adjusted for inflation, is still just twenty-two cents, or less than one percent above where it was in January 2009.  There are reasons to believe that meaningful wage growth will soon be part of our future.  As an example of what’s to come, Walmart, the nation’s largest private employer, recently announced that it would increase wages for half a million of its workers, including many of its lowest paid. 

The company announced that it would spend about a billion dollars per annum to raise the pay of all of its employees to at least nine dollars per hour by April and to at least ten dollars per hour by next February.  Importantly, average inflation-adjusted hourly wage for private sector workers has risen more rapidly over the past year than at any time since 2009.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.