Friday, April 3, 2015

[NJFAC] Great News: Wage Growth In America Has Never Been Higher... For Your Boss

Several weeks ago we revealed the "The Mystery Of America's Missing Wage Growth" in which we showed why matter how hard the Fed tries to push the S&P 500 higher (and it has certainly done an admirable job of manipulating the market to record highs), it has over the past 7 years failed to trickle down any of this redistributed "wealth" in the form of rising wages for US workers. Or rather, for most US workers. Because as usually happens, this is a story with two parts.

First, the main reason why wage growth remains subdued, and 50% below the Fed's target, has to do with what continues to be record slack in the economy ....

According to the BLS there were 98.4 million "production and non-supervisory" private workers in March, or 82.5% of the total 119.3 million private workers employed in the same month. This also means that there are about 17.5% supervisory, or "boss" jobs in the US.

It is the distinction between the two that is critical. Because as the BLS also reported today, in addition to a disappointing 2.1% wage growth for all US employees, this was accompanied by an even more disappointing 1.56% annual increase in compensation for the majority of America, i.e., its non-supervisory workers, whose average hourly earnings rose from $20.50/hour a year ago to $20.86 in March.

But, if wage growth for over 80% of America's workers is sliding even as wage growth for all American is flat, that must mean that the wage growth for the tiny 17% of America that is its bosses and supervisors must be soaring. And sure enough, it is.

In fact, as the chart below shows, wage growth of "supervisory" workers has never been higher!

National Jobs for All Coalition

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