by Xinhua writer Gao Pan
“I believe there are a number of CEOs that will come out in the next six months with wage increases that will matter,” Mark T. Bertolini, chairman and Chief Executive Officer of U.S. health insurance giant, Aetna, said this week.
If his prediction comes true, millions of working Americans will get a lift in their paychecks this year. That could signal a turning point in wage growth for the world’s largest economy that witnessed almost six years of virtually stagnant wage increases since the end of the recent recession.
Embryonic signs of the long-awaited acceleration in American paychecks have sprung out recently amid a tightening U.S. labor market which means employers are facing increased competition to hire and retain workers.
In mid-January, Aetna announced that it would increase its minimum wage for its U.S. employees to 16 U.S. dollars an hour starting April, which means an average pay rise of 11 percent for about 5,700 workers.
In February, Walmart, the nation’s largest private sector employer, said that it would raise the minimum wage for its workers to at least 9 dollars an hour starting April, affecting more than a third of its 1.4 million employees. By next February, Walmart’s lowest wage will rise to 10 dollars an hour.
U.S. fast-food giant McDonald’s also followed suit. The company announced that starting wages would be one dollar over the local minimum wage for employees in the 1,500 restaurants it owns in the United States starting July. The company will raise its average minimum wage to more than 10 dollars an hour by 2016.
These voluntary wage increases are clear signs that the falling unemployment is putting pressure on companies to raise wages. “The unemployment rate is nearing the point where we may begin to see a pickup in the pace of real wage gains,” William Dudley, president of the Federal Reserve Bank of New York, said Monday.
U.S. unemployment rate edged down to 5.5 percent in March, getting very close to the range between 5 percent and 5.2 percent that the Federal Reserve officials estimate is consistent with full employment, according to the Labor Department.
“With unemployment rate going down, there are fewer workers and more job openings to be filled, employers have to raise wages to attract workers,” David Stockton, senior fellow at the Peterson Institute for International Economics (PIIE), told Xinhua on Tuesday.
“That’s why I’m optimistic (it’s) a turning point here. We’re going to see more wage increases,” Stockton said, adding that Walmart and other U.S. firms are in a strong position that “they can raise wages without seriously damaging their own businesses.”
But Stockton didn’t expect wage growth to accelerate sharply in the coming years as there’re still a lot of people working part- time even though they want full time jobs. As the labor market continues to improve, those people currently outside the labor force will come back into it, which will also take a little pressure off the wage growth, he added.
Wage growth for U.S. workers remained modest last month. Average hourly earnings rose 7 cents to 24.86 dollars in March and were up only 2.1 percent over the past 12 months, the Labor Department said last week.
As the labor market inches closer to a turning point, low- income workers around the country continue to push states and businesses for an increased minimum wage.
U.S. President Barack Obama has also proposed raising the federal minimum wage to 10.10 dollars per hour from the current rate of 7.25 dollars for several years, but Republican lawmakers have so far blocked those efforts, saying it will add to the operating costs of business owners.
However, economists at the PIIE on Monday welcomed private companies’ recent moves to increase minimum wage, arguing that raising the pay of the lowest-paid U.S. private-sector workers ” would not only reduce income inequality but also boost overall productivity growth, with likely minimum effect on employment in the current financial context.” Enditem