NCPA - National Center for Policy Analysis

Wages Rising For Low-Skilled

May 23, 1997

The booming economic growth of the last few years has put low-skilled workers in high demand. Over the last 18 months, wages for employees at the low end of the pay scale have been rising significantly faster than the inflation rate -- even faster, in percentage terms, than the pay of middle-income Americans.

  • In the first quarter of this year, the weekly wages of full-time, adult workers in the bottom 10 percent of the wage spectrum rose at a 4.4 percent annual rate -- bringing the top of that group to $259 a week, or $6.48 an hour.
  • By comparison, the median weekly wage rose 3.5 percent to $536 a week, or $13.40 an hour.
  • Economists say the increases are a direct result of the lowest unemployment rate, 4.9 percent, in 23 years -- which is forcing firms to raise salaries to attract and keep workers.
  • In the past year, the work force has grown by 2.7 million -- the largest annual gain in over a decade and more than twice the increase in the working age population -- while drawing more black women, older men, immigrants, teen-agers and Hispanic Americans into the labor force.

Low-paid workers are more likely than those making higher salaries to switch jobs for an extra 50 cents or $1 an hour in a tight labor market, thereby pressuring employers to give wage increases in order to hold on to them, economists point out.

At the low end, labor shortages are not as acute in the Northeast as they are in the South and Midwest. In southern California and south Texas, however, the influx of immigrants inflates the labor supply, helping to keep down wages in those areas.

Low-wage jobs are often entry ports to middle-income pay, personnel specialists report.

Source: Louis Uchitelle, "Raises Arrive at Bottom Rung of Labor Force," New York Times, May 23, 1997.

 

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