For the first time in nearly a decade, the real wages of average
workers are starting to rise - putting more money in the pockets of
millions of Americans from Miami to Seattle.
While the gains are not enough to allow anyone to purchase a
bungalow in Bermuda, they represent some of the biggest increases
in living standards in 30 years for lower-income America - a group
left out of the "golden" economy of the mid-1990s.
In other economic expansions since World War II, workers saw
their wallets swell quickly. But not in the recovery that began in
early 1991. Most have seen their paychecks shrink after inflation.
"The average guy hasn't had it this good in decades," says Bruce
Steinberg, chief economist for Merrill Lynch & Co. in New York.
The shift in wages is evident at Clean Edge, a janitorial
service in Needham, Mass., a western suburb of Boston. It now
offers $7 an hour when advertising for new employees. A year ago
the firm offered $6 an hour.
"It's due to things being good and there being plenty of jobs
out there," says Keith Wilson, owner of Clean Edge. "I attract more
calls at $7 an hour than $6."
The tighter labor market is noticed by both statisticians and
much bigger employers than Mr. Wilson, with his eight employees:
* The Bureau of Labor Statistics in Washington reports that
wages and salaries were up 3.3 percent in the year ending in June.
Total compensation, which includes such benefits as health and
pension costs as well as wages, was up 2.9 percent. Both increases
beat the rise in the consumer price index of 2.5 percent in the
* Using a different calculation, Mr. Steinberg finds a 2.2
percent gain in real wages in the past 12 months.
* Michael Calabrese, an analyst at the Center for National
Policy, a Washington think tank, estimates real compensation is now
back to its 1989 peak before the last recession. But it isn't back
to 1985 levels.
"We feel that same modest growth in wages," says Carl Camden, an
executive vice president at the headquarters of Kelley Services in
Troy, Mich., one of the nation's largest providers of temporary
Moving up from low rungs
Even workers near the bottom of the income ladder are racking up
"Low-wage workers were taking it on the chin for the last 15
years," says Jared Bernstein, an economist at the Economic Policy
Institute, another Washington think tank. "But there have been
broad-based wage gains over the last year."
By his estimate, a man who made $7.20 an hour a year ago is now
making $7.27 in constant dollars - not enough to buy a family yacht
but movement in the right direction. A woman at the same point on
the income ladder has seen her hourly wage rise less, to $6. …