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11/22/2024 09:36:52 am

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Stagnant Pay: U.S. Job Market's Lingering Weak Spot

rally for wage increase

(Photo : REUTERS) Rally for wage increase

Amid the U.S. job market's improvement in nearly every gauge, the pay is one thing that remains constant.

The unemployment rate in the United States has massively decreased to only 6.1 percent as companies added about 2.5 million jobs within the past year.

But despite the increase in employment rate, employees are waiting for an increase in their compensation.

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August jobs on Friday reported that the average pay per employee has only increased about two percent  a year since 2009, when the recession ended.

The trend of stagnant pay in an improving economy has raised questions among economic analysts.

Chief economist Joe Brusuelas of the McGladrey tax and accounting firm, said the Federal Reserve is now facing one main economic and policy question: "Why have wages remained so low in the face of an improving economy?"

But other economists said they expect wages to increase soon since the job market is consistently improving.

According to these economists, pay may have been stagnant because many people are still unemployed, they added that the unemployment rate does not count those who are no longer looking for a job.

Others, however, believe pay have not improved because employers are continuing the trend which stated when the country was at the peak of recession years ago.

Also, they pointed out that employers are now taking advantage of low-paid temporary workers and new technologies, which allows companies to increase production with less manpower.

The stagnated pay has been a constant issue for economists as they try to answer why the wage growth has been weak.

Economists noted several reasons for this incidence, the biggest factor being that a lot of people are still desperate for a job despite the healthy economy.

Also, the number of part-time employees, who do not have the right to demand wage increases from their employers, is increasing.

Overall, the economists and other business analysts believe that this issue of stagnant pay will be resolved by mid-2015.

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