Your Wages Might Go Down – Because the Economy Is Getting Stronger

An unidentified worker sanitizes the grandstand handrails despite being closed to the public for safety concerns over the coronavirus in Arcadia, California on Evers/Eclipse Sportswire/CSMHorse Racing Horse Racing continues despite COVID19, Arcadia, USA - 14 Mar 2020.
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In what seems like a paradox, average U.S. hourly wage growth could be set to slow — and even show negative growth — as the economy rebounds, Bloomberg reports. However, in a White House blog post, the government warns that “average wage data will be easy to misinterpret in the coming months.”

See: Do You Think the Minimum Wage Should Be $15? Take Our Poll
Find: The 50 Lowest-Paying Jobs in America

Why could a growing economy mean shrinking wages?

First, it’s important to understand that individual workers won’t experience pay cuts in coming months. However, the average national hourly wage will drop as lower-wage employees return to work after the job cuts that took place during the pandemic. Of the 21 million job cuts that occurred, most were “low paid work in service industries,” according to Bloomberg. Therefore, average wages rose because the people still employed were the ones earning higher salaries.

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Additionally, Opportunity Insights, a Harvard University research project tracking economic recovery, found that employment bounced back to pre-pandemic levels for higher wage workers fairly quickly — in large part because many higher wage employees were able to work remotely.

See: Major Companies May Cut Salaries for Remote Workers
Find: US Companies Added Most Jobs Since September Last Month

However, so far this year, 1.5 million service jobs have opened up again, especially in the leisure and hospitality industry, which Bloomberg says is one of the lower-paying industries in the U.S.

Calling the fall in average wages a “computational quirk,” the White House reports, “[T]he typical worker is not likely to experience the slowdown in wage growth that we expect to see in the upcoming data as the economy improves.”

In stark contrast to the government data, recent months have actually shown a rise in hourly wages from some major companies, including Costco, which raised its minimum wage to $16 an hour. Target, Best Buy and Amazon now pay a minimum of $15 an hour.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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