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Amid the tightest labor market in a generation, long-strapped Americans are seeing only small wage hikes, and economists say companies seem determined to hold onto wide profit margins for as long as they can before forking over more to workers.

Expand chart
Wages rose much more steeply in the late 1990s, the last time unemployment was as low as now. Data: BLS, BEA, Jared Bernstein analysis; Chart: Axios Visuals

Why it matters: Stubbornly flat wages and living standards are one reason for broad political disgruntlement in the U.S.

Quick take: Economists have struggling to grasp why companies are not feeling forced to pass on bigger wages to attract and keep workers despite two years of steadily dropping joblessness, reaching 3.9% last month, the lowest since 2000.

But an increasing consensus is this simple conclusion — because they can.

  • "As long as firms have the clout to hold back pay increases, they will," Jared Bernstein, chief economic adviser to Vice President Joe Biden during the Obama administration, told Axios today.

The background: In the 2000 plunge of joblessness, wages increased by 4% on average. Today, companies across industries and the country complain of an employee shortage, but on average raised wages by just 2.6% last month, maintaining a long period of relatively flat compensation, according to the U.S. Bureau of Labor Statistics. Among reasons that economists cite:

  • A new underlying structure: Productivity growth is lower, people are more or less permanently out of the work force with drug addiction and criminal records, and unionization numbers are much smaller.
  • Business trends: Companies are becoming more automated and industries more concentrated, says Martha Gimbel, research director at Indeed. "It may just be that these structural factors are making it more difficult for workers to benefit," she tells Axios.

But, but, but ... Mark Zandi, chief economist at Moody's Analytics, tells Axios that less-watched statistics show more accelerated wage increases. Zandi cites the Employment Cost Index, which shows a 2.9% wage increase last quarter.

  • He predicts that the number will rise to 3.5% by this time next year and closer to 4% by the end of 2019.
  • "It's accelerating and is consistent with the state of the labor market," Zandi said.

Go deeper: Bernstein did a mashup of five government wage measures (chart above) that shows the far steeper wage increases in 2000. Read his Friday column in the Washington Post.

Go deeper

9 hours ago - Health

Food banks feel the strain without holiday volunteers

People wait in line at Food Bank Community Kitchen on Nov. 25 in New York City. Photo: Michael Loccisano/Getty Images for Food Bank For New York City

America's food banks are sounding the alarm during this unprecedented holiday season.

The big picture: Soup kitchens and charities, usually brimming with holiday volunteers, are getting far less help.

11 hours ago - Health

AstraZeneca CEO: "We need to do an additional study" on COVID vaccine

Photo: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

AstraZeneca CEO Pascal Soriot said on Thursday the company is likely to start a new global trial to measure how effective its coronavirus vaccine is, Bloomberg reports.

Why it matters: Following Phase 3 trials, Oxford and AstraZeneca said their vaccine was 90% effective in people who got a half dose followed by a full dose, and 62% effective in people who got two full doses.

Updated 13 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus cases rose 10% in the week before Thanksgiving.
  2. Politics: Supreme Court backs religious groups on New York coronavirus restrictions.
  3. World: Expert says COVID vaccine likely won't be available in Africa until Q2 of 2021 — Europeans extend lockdowns.
  4. Economy: The winners and losers of the COVID holiday season.
  5. Education: National standardized tests delayed until 2022.