Wage Growth: Dead Cat Parabola

The following chart shows the 6-month moving average of the annual hourly earnings growth of production and nonsupervisory private service providing employees.


Click to enlarge.

Conventional wisdom says, "As the unemployment rate falls, hourly earnings growth must rise. Companies will be forced to pay more to attract quality workers."

Unconventional wisdom says, "Service employment glut. With so many service providing workers out there competing with each other, how can any individual service worker expect to get ahead?"

Let's hope conventional wisdom finally has it right this time, or our service economy risks getting seriously "serviced" yet again.

Source Data:
St. Louis Fed: Custom Chart