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Economists continue to ponder slow-growing wages for American workers, even as the unemployment rate falls to to historically low levels. In a note to clients this week, Bank of America economist Michelle Meyer points out that:

  • The unemployment rate is 4.4%;
  • Companies have the most job openings available since 2001;
  • Workers are quitting at the fastest rate since 2007.

"All else equal, this seems like an equation for"normal" pace of wage growth of 3.5-4.0%," she writes. Yet we're only seeing worker pay rise by roughly 2.5% per year.

What gives? One theory is that due to increasing specialization and demand for higher education levels, it's become difficult for workers to switch jobs or careers to those that pay more. Evidence shows that such "job-to-job" transitions are happening at a lower rate today, relative to unemployment levels, than in the past.

Minimum wages, union activity: A primary driver of higher worker pay in recent years has been states and localities raising their minimum wages. Meyer points out that at an industry-specific level, retail and hospital workers have seen their wages rise faster than average, as many of these industries have been forced by local laws to raise pay. In addition, BofA analysts predict high wage increases in the airline industry as the result of new union contracts.

Location matters: Torsten Slok, Chief International Economist with Deutsche Bank Securities argues that the Federal Reserve might just have to be patient and tolerate a much lower unemployment rate than normal before it sees faster wage growth. " The unemployment rate in Maine and New Hampshire is around 3%, well below the national average of 4.4%," he emails. "And in those two states we have recently seen wage growth at 4% - 5%, well above the national average."

Go deeper

Off the Rails

Episode 2: Barbarians at the Oval

Photo illustration: Sarah Grillo/Axios. Photo: Jim Watson/AFP/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 2: Trump stops buying what his professional staff are telling him, and increasingly turns to radical voices telling him what he wants to hear. Read episode 1.

President Trump plunked down in an armchair in the White House residence, still dressed from his golf game — navy fleece, black pants, white MAGA cap. It was Saturday, Nov. 7. The networks had just called the election for Joe Biden.

Fringe right plots new attacks out of sight

Illustration: Aïda Amer/Axios

Domestic extremists are using obscure and private corners of the internet to plot new attacks ahead of Inauguration Day. Their plans are also hidden in plain sight, buried in podcasts and online video platforms.

Why it matters: Because law enforcement was caught flat-footed during last week's Capitol siege, researchers and intelligence agencies are paying more attention to online threats that could turn into real-world violence.

Kids’ screen time up 50% during pandemic

Illustration: Sarah Grillo/Axios

When the coronavirus lockdowns started in March, kidstech firm SuperAwesome found that screen time was up 50%. Nearly a year later, that percentage hasn't budged, according to new figures from the firm.

Why it matters: For most parents, pre-pandemic expectations around screen time are no longer realistic. The concern now has shifted from the number of hours in front of screens to the quality of screen time.