It wouldn’t hurt to have some longer-term perspective on what’s been happening with average hourly earnings as the labor market tightens. In a couple of words: not much.
Graphed below is a history of the yearly growth in nominal average hourly earnings (AHE)—since 1965 for production/nonsupervisory workers and since 2007 for all workers. (The all-worker series is fairly short, making long-term comparisons impossible, but it does track the production worker series pretty well.) Note that both series are very close to their historical lows.
For the year ending in February 2015, AHE for production workers are up 1.6%—half the 3.1% 1983–2015 average. That figure was a little lower in 2012, but it’s quite close to three earlier troughs. In May 2014, less than a year ago, the annual gain was 2.4%. So we’re down 0.8 on wage gains—coincidentally, exactly what the decline in unemployment has been over the same period (6.3% to 5.5%). Wages aren’t usually thought of as decelerating as the labor market tightens, but that’s what’s happened.
The slowdown in all-worker AHE is less dramatic, but February’s 2.0% annual gain is below the 2.4% average for the entire series, and 2014’s 2.1%—and considerably below the 2008–2009 average of 2.9%, when the economy was falling apart.
So, really, weak wage growth looks to be more of a macroeconomic problem now than wage pressures.