Why has wage growth stayed strong?

Mary Daly, Bart Hobijn and Brian Lucking

FRBSF Economic Letter, 2012, issue apr2

Abstract: Despite a severe recession and modest recovery, real wage growth has stayed relatively solid. A key reason seems to be downward nominal wage rigidities, that is, the tendency of employers to avoid cutting the dollar value of wages. This phenomenon means that, in nominal terms, wages tend not to adjust downward when economic conditions are poor. With inflation relatively low in recent years, these rigidities have limited reductions in the real wages of a large fraction of U.S. workers.

Keywords: Wages (search for similar items in EconPapers)
Date: 2012
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