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Workers struggle with earning decent pay raise

WASHINGTON — Despite one of the best job markets in decades, workers across the U.S. economy are struggling with a common frustration: What does it take to finally get a decent raise?

It turns out you might have to quit your job.

Americans who leave their employers to take a new job are enjoying pay raises that are one-third larger than raises for workers who stay put — a gap that has reached the widest point since the Great Recession.

At the same time, retail and restaurant workers are receiving more generous raises than manufacturing workers are.

And America’s CEOs are getting some of the biggest pay gains of all.

At a time when the average annual wage increase for U.S. workers as a whole remains surprisingly modest given the robust job market, those groups of workers are doing better than average.

Others aren’t faring as well. Pay raises for people who have stayed in the same job for the past year, for example, remain relatively stagnant. That trend has confounded some economists. Many had expected that companies would have to pay more to retain employees at a time when workers are harder to find and the unemployment rate, at 3.9 percent, is near a 50-year low.

Nationally, average hourly pay rose 2.7 percent in July from a year earlier, before adjusting for inflation. That is modest by historical standards. The last time unemployment was this low, in the late 1990s, pay raises for Americans as a whole averaged roughly 4 percent.

And once you factor in inflation, average hourly pay has actually declined slightly over the past 12 months.

With midterm elections looming, the Trump administration is pushing back against the notion that paychecks aren’t growing much. In a report released Wednesday, the White House’s top economist, Kevin Hassett, asserted that pay is picking up if you consider benefits such as health care, an alternative gauge of inflation and the impact of tax cuts.

Yet even by the White House’s own measure, wage increases have slowed over the past three years.

Here are some ways in which average pay growth varies depending on the category of worker:

– Find new job, get big raise

It would seem fundamental: If you want a significant raise, find a new job. But it doesn’t always work that way. For the first six years after the 2008-09 Great Recession, people who switched jobs received raises that were scarcely better than those for workers who stayed in their jobs.

But since then, the switchers have commanded steadily better raises than the stayers.

In July, wages for job switchers grew 3.8 percent from a year earlier, compared with 2.9 percent for those who stayed behind, according to data from the Federal Reserve Bank of Atlanta. In February and March this year, that gap reached 1.7 percentage points, the widest disparity since August 2001.

Still, the figures also illustrate how pay is still lagging compared with previous periods of brisk job growth. Even the pay gains for job-switchers are relatively modest compared with periods in the past. Before the recession, job switchers received annual raises of nearly 5 percent. In the late 1990s, they topped 6 percent.

For roughly three years now, average raises for workers who have stayed in their jobs have remained stuck below 3 percent. In addition, many job-switchers may have mastered high-tech and other skill sets that allow them to command higher wages as competition for such workers heats up.

– Lower-paid workers receive solid gains

For six years following the recession, the lowest-paid workers got the weakest wage gains. Yet since 2015 they have clawed back some of those losses.

For the lowest-paid one-fifth of the workforce, wages rose 2.3 percent in 2017, adjusted for inflation, according to the Economic Policy Institute, a liberal think tank. That topped the average for middle-income workers, whose pay gains inched up just 0.2 percent.

Low-paid workers also saw a huge gain in 2016 that ran far ahead of middle-income and wealthy employees.

More than 20 states have raised their minimum wages above the federal minimum of $7.25, some of them substantially higher. Those higher minimums have provided a boost to lower-income workers.

The ultra-low unemployment rate has also helped. Many businesses say they are desperate to find workers. And in some lower-skilled industries, such as restaurants, they have to pay more to find staff.

– CEOs still raking it in

Even as poorer workers have fared better, CEOs have done best.

In 2017, the chief executives of the 350 largest publicly traded U.S. companies reported, on average, an increase in compensation of nearly 18 percent, according to a report by the Economic Policy Institute. That compares with a raise of just 0.3 percent for all other workers in the same industries.

In 2017, large-company CEOs made $18.9 million, on average. That is 312 times the average pay of workers in the same industries.

– Gains for whites, Latinos

White Americans, on average, earn much more than African-Americans or Lati­nos. The gap between whites and Latinos has narrowed very slightly in the past three years as wage gains have begun to pick up across the economy after six years of little growth.

For whites and Latinos, pay rose 0.9 percent adjusted for inflation last year; for Afri­can Americans, it fell 0.5 percent. Latinos received the biggest raises in 2016; whites earned the most in 2015.

– Restaurants, construction trounce manufacturing

Workers in some industries have also done better. In July, restaurants and bars handed out raises of 4 percent from a year earlier, before taking inflation into account. Pay for construction workers increased 3.2 percent. Even retail workers’ pay grew 2.9 percent, slightly better than the average.

Yet for manufacturing workers, pay has risen just 1.2 percent in the past year even as hiring has accelerated. Temp workers now make up roughly 12 percent of manufacturing workers, according to the EPI.

U.S. automakers are now paying new and younger employees much less than older workers, likely contributing to lower overall pay.

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