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Federal Reserve Bank of Chicago
Chicago Fed Letter
Understanding the Relationship between Real Wage Growth and Labor Market Conditions
Daniel Aaronson
Andrew Jordan
Abstract

The authors find that the share of the labor force that is medium-term unemployed (five to 26 weeks unemployed) and the share working part time (less than 35 hours per week) involuntarily are strongly correlated with real wage growth. Moreover, they estimate that average real wage growth would have been between one-half of a percentage point and a full percentage point higher in June 2014 if 2005–07 labor market conditions had been restored, indicating that the slack in the jobs market still weighs heavily on the real wage prospects of U.S. workers.


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Daniel Aaronson & Andrew Jordan, "Understanding the Relationship between Real Wage Growth and Labor Market Conditions" , Federal Reserve Bank of Chicago, Chicago Fed Letter, issue Oct, 2014.
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Keywords: Labor force; unemployment; wages
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