SF Fed: Wages Growth Not Reflecting Job Market Strength

A rise in wages across the United States does not necessarily reflect the job market strength, according to new research by the Federal Reserve Bank of San Francisco.

An economic letter titled “The Illusion of Wage Growth” noted that despite a sharp spike in unemployment since March 2020, aggregate wage growth has accelerated. This acceleration has been almost entirely attributable to job losses among low-wage workers.

“Wage growth for those who remain employed has been flat. This pattern is not unique to COVID-19 but is more profound now than in previous recessions.”

“This means that, in the wake of the virus, evaluations of the labor market must rely on a dashboard of indicators, rather than any single measure, to paint a complete picture of the losses and the recovery.”