Still Waiting for Wage Growth

May 12, 2015

On Friday, April’s unemployment rate was announced at 5.4%, the lowest reading since May 2008 and significantly down from its peak reading of 10% in the aftermath of the Great Recession. Despite the low participation rate (62.8%), the dramatic improvement in the unemployment rate should be viewed as a positive development for the United States economy.

Although the unemployment rate has recovered, wage growth continues to stagnate, as shown by our chart this week. In looking at the chart, a negative correlation between unemployment and wage growth is abundantly clear and makes sense intuitively: when unemployment is high, workers do not have pricing power to demand higher wages, but when unemployment is low and demand is high for employees, firms are forced to offer higher wages to entice workers. The most recent recovery in the unemployment rate, however, has not been accompanied by the ascension in wage growth that is to be expected. So while the lower unemployment rate is encouraging, it is difficult to label the labor market as fully recovered until we see more tangible growth in hourly earnings.

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content

05.12.2025

The Great Currency Reversal

As a result of policy uncertainty, shifting sentiment, and a potential U.S. economic slowdown, the dollar has moved lower in…

05.07.2025

I Want a New Drug

The aging population in the United States has garnered increasing attention over the past two decades, coinciding with the retirement…

04.29.2025

Measuring the Impact of Tariffs on Equity Performance

This week’s chart shows two indices created by Morgan Stanley that seek to track the performance of companies with different…

04.28.2025

As Real Estate Finds Its Bottom, Alternative Sectors Become More Prominent

Since the onset of the pandemic, the commercial real estate market has experienced significant volatility — first benefiting from a…

04.23.2025

Growth to Gold: Wall Street’s Favorite Trade Just Changed

According to the most recent Bank of America Global Fund Manager Survey, gold has surged to the top of the…

04.17.2025

1Q 2025 Market Insights

This video is a recording of a live webinar held April 16 by Marquette’s research team analyzing the first quarter…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >