Here is a longer look at the anemic outlook for wages for BusinessWeek. A key point is this:
What is disturbing is that the outlook for wages and incomes over the short and long term looks bleak even when the recovery is in full swing. The pay rewards for work have been severely lacking for a majority of workers over the past three decades. Whether the measure is wages, earnings, or total compensation, the inflation-adjusted pay narrative remains the same: Workers have seen their inflation-adjusted pay go up only a little during the past four business cycle expansions while most of the gains have been captured by the top 10% to 15% of workers. A major lesson of the Great Recession is how financially vulnerable workers are with jobs and incomes less secure than ever.
“It isn’t a healthy economy,” says Paul Osterman, professor of human resources and management at the MIT Sloan School of Management. “There is a broad sense that it’s a precarious labor market.”
One reason why I don’t think we’ll return to borrowing more and saving less is tough wage pressure. The combination of anemic wage increases and job insecurity will drive many folks to save more going forward–even when the economy does turnaround.