One of the key factors that will determine when the Fed will increase interest rates is wages which, for multiple reasons, have been slow since the Great Recession. MarketWartch staffer Greg Robb reports on why wage growth has been so slow, an average of 2.25% for the past two years, well below the 3.25% from 1983 to 2015.
New research from the San Francisco Fed shows that there are a number of factors which are causing wages to grow at a slow rate. While high-paid retirees are a notable factor in the increase, there are others:
One factor is that low-wage workers are moving to full-time jobs. The vast majority of these new workers earn less than the typical full-time employee, so their entry pushes down the average wage, the researchers found.