Despite all of the talk about the "low" unemployment figures and increased employee productivity in the US, wages failed to keep up with inflation in 2004. Employers are talking about increased health care costs as one reason, though with my friends and family those costs have often been pushed directly over to employees so I'm not so sure I can accept that reasoning though it could be possible.
While some analysts are suggesting that we may be in for a period of stagnating wages others are saying that 2004 was just a hiccup and everything will be better moving forward. Who would guess that economists might see things so differently? We won't really know until next year but it's something quite serious to follow.
Since 2001, when the recovery began, productivity growth has averaged 4.1 percent a year; overall compensation - wages and benefits - has risen about one-third as fast, by 1.5 percent a year on average. By contrast, over the previous seven business cycles, productivity rose by 2.5 percent a year on average while compensation rose roughly three-fourths as fast, by 1.8 percent a year.
