Why aren’t wages growing faster? After all, unemployment has fallen to 3.8 percent, and many businesses are complaining about labor or talent shortages. “The unemployment rate is below where it was before the Great Recession back in 2007,” Nick Bunker of the Washington Center for Equitable Growth wrote on May 29, “but nominal wage growth is below its level that year and hasn’t picked up in recent years (according to some data series). For economists and analysts who believe that a tighter labor market should lead to higher wages, this disconnect is confusing.”

The good news is that (1) average hourly earnings beat expectations in May, and (2) the available evidence suggests that more and more companies are raising workers’ pay and/or enhancing other forms of compensation.

This week alone:

  • The Federal Reserve’s Beige Book reported that, in late April and early May, “Many firms responded to talent shortages by increasing wages as well as the generosity of their compensation packages.”
  • The National Federation of Independent Business published its May survey of member companies (small firms), which found that “reports of increases in labor compensation reached record levels (35 percent) as owners try to attract needed employees and retain those already on board.”
  • HR Dive reported that 46 percent of the employers in a Snag survey “are raising wages to compete for talent.” More broadly, “Employers are offering more full-time jobs and healthcare and paid time off (PTO) benefits to attract talent, the survey shows.”


  • The Washington Post reported that, “at a time when competition for even unskilled labor is rising amid low unemployment, greater immigration scrutiny and fewer teenagers seeking to work in fast-food jobs,” a Chick-fil-A restaurant owner in Sacramento is planning to increase his employees’ hourly wages from $12–$13 to $17–$18.

Writing at National Review, Mark Krikorian of the Center for Immigration Studies provides additional examples of labor-market tightening, such as the news that BNSF Railway is offering “signing bonuses [of] up to $25,000 for hourly workers, including electricians, boilermakers and pipefitters,” and the news that, according to Associated General Contractors of America CEO Stephen Sandherr, “Many firms are boosting pay and taking other steps to compete for a relatively small pool of available, qualified workers to hire.”

Krikorian also explains the larger significance of a tight labor market: “A tight labor market means that our fellow citizens who are the least attractive to employers — and on whose support we collectively spend billions — suddenly become a lot more attractive. In other words, a tight labor market is the best social policy. America wins when employers have to exert themselves to recruit and retain workers. The result is higher wages for less-skilled workers and more people drawn into the productive world of work.”

Beyond encouraging short-term wage and compensation increases, a tight labor market also encourages long-term investments in worker training. Back on March 8, for example, the Atlanta-based Home Depot Foundation announced that it was making “a $50 million commitment to train 20,000 tradespeople over the next 10 years in order to fill the growing skilled labor gap.”

Needless to say, all of this has crucial implications for America’s immigration policy. After ticking off a list of recent stories highlighting the benefits of our tightening labor market, Krikorian asks, “Does anyone think this would be happening if the Schumer-Rubio Gang of Eight bill had passed, with its doubling of green cards and guest-worker visas?”

It’s a question every member of Congress should ponder before supporting massively higher levels of immigration.