Pay raises hit a speed bump
We’re getting some disappointing news on wages today.
A National Association for Business Economics survey of 76 businesses finds just 24% raised salaries in the third quarter. That’s well below the 43% that did so in the second quarter, and it broke a string of quarterly increases that began last year.
Yahoo Finance’s Jeff Macke isn’t surprised.
“There’s no inflation,” he says. “And it's nice to get a pay raise. But it’s not up to companies to see that employees get every incremental dollar that’s available.”
Macke notes that companies are looking much more at the bottom line than what their workers earn.
“Their job is to hold down costs, to improve margins and give the final, paying customer a little extra bang for their buck,” he says.
But he suggests salaries will get more attention if there’s a change in investor perceptions about what firms should be doing with their money.
“If they want to miss earnings by 10 cents and Wall Street actually drives the stock higher when they explain it’s based on wages, then companies will be aligned in their interest,” he adds.
Recently, two big employers, Wal-Mart (WMT) and Starbucks (SBUX), announced they were taking steps to improve worker pay.
The issue of stagnant wages has been a hot topic in financial circles of late. Many economists say the economy really can’t take off unless pay goes up. And last week, Fed Chair Janet Yellen pointed to slowing wages as one of the reasons behind growing income inequality. In a speech she pointed to Federal Reserve data that shows between 1989 and 2013, income for the top 5% of Americans jumped 38%, while the other 95% saw their income rise less than 10%.
However, Macke says he’d prefer Yellen to stay focused on the Fed’s stated duties and not veer off topic.
“Her job is to worry about inflation and interest rates,” he says. “We’ve had enough of this Fed Chair responsibility smearing over Greenspan and Bernanke. It’s about time we hear less from these people.”
