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In Demand and in Command
Wages for nonsupervisory workers rose 3.4 percent in the year ended in March, notes Economic Policy Institute Senior Economist Jared Bernstein. That's less than consumer prices rose over that period, but mainly because of the sharp increase in energy prices in that span. In the year ended in March 2004, wages rose only 2.6 percent.
"I think we're awfully close to a tipping point where nominal wage growth begins to beat inflation," Bernstein said.
The real issue he and other economists are trying to figure out is what level of joblessness the nation can handle without generating wage inflation. While the unemployment rate is at its lowest level since 2001, there may still be some slack in the labor market, as the proportion of the population in the labor force is still lower than it was in 2001. Apparently many Americans who stopped working during the recession have not yet elected to look for a job again, but economists think they might now that the balance of power is shifting between workers and employers.
At Vedior, the staffing firm, wages for many jobs are still rising gradually -- but people with specialized skills in accounting, information technology or nursing can demand bigger raises, said Netland, the chief executive. Workers with fewer skills, such as those in a division of his company that provides temporary staff for light industrial tasks and such in California, are seeing more modest raises.
But it's still not much like 2000. "You're seeing a more reasonable approach from employers. They're still cautious, not out there throwing money around to get people at any cost, which is a good thing."
That could change, though, if the job market continues the way it's going. "If this market continues, you could see more raises," he said.
The strong employment situation is driven by companies that are spending money more eagerly -- on both staff and equipment -- than they have for most of the current expansion. Moreover, while economists widely expect consumer spending to slow this year along with the housing market, there are signs that they have not done so yet.
For example, yesterday, major retail chains announced that sales were up 6.6 percent in April over a year earlier at stores open throughout that period. But that partly reflected the Easter holiday falling in April this year.