Job Growth Without Wage Gains

Strangler describes people's experiences with wage stagnation and illustrates the balance between business and labor. "Standard economic theory holds that, at some point, sinking unemployment will translate into wage gains: when companies have a smaller pool of talent to choose from, they tend to offer more attractive salaries. By the same token, when workers have a sense of job security, they're more likely to ask for a raise. This hasn't happened. 'I haven't run any empirical work on this, but I'd want to see the unemployment rate a lot closer to 5 percent, maybe even slightly below, before I would expect to see that we'd get significant wage pressure,' said Richard McGahey, an economist at The New School and former economic policy adviser for Sen. Edward Kennedy. 'Shrinking union density has boosted the share of profits going to bosses rather than workers, McGahey said.'"