Why falling unemployment isn’t boosting US wages

“The US economy is behaving mysteriously,” Peter Coy reports for Bloomberg Businessweek. Unemployment is at a 10-year low, yet hourly earnings rose at a surprisingly low 2.5% over the last year, Coy writes. Economists suggest a number of theories: First, the weakening of labour unions means less leverage for workers. Low inflation may be shrinking demand for higher wages. Output per hour has been shrinking, and companies are improving employee retention programmes. And the unemployment figures may not truly reflect how many people are on the sidelines of the labour market. There’s not yet a “single convincing explanation,” Coy writes.

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