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Sustained Period of Improvement in U.S. Wage Growth - 11/24/15

Perhaps the most important aspect of the upbeat October jobs report was the zero point four percent monthly jump in average hourly earnings.  As pointed out by writer Greg Ip, wages are up by two point five percent over the past twelve months, the fastest pace of year-over-year wage growth since two thousand and nine. 

However, there have been other months during which wage growth appeared to accelerate only to be followed by months during which wage expansion flattened.  So is the recent uptick in wage growth for real?  There are reasons to believe that it is.  Companies from McDonald’s to Walmart have announced broad-based increases in wages for their lowest paid employees.  In the retail category, wages are up three point two percent over the past year. 

In the leisure and hospitality category, which encompasses employment among hotels and restaurants, wages are up two point five percent over the past year.  While these rates of wage increase remain below the three point five percent rate that the Federal Reserve Bank considers healthy, we now appear to be in the midst of a sustained period of improvement in U.S. wage growth.

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.