Why Are Wages Rising Slowly?

Maybe because businesses are getting bigger

Small businesses – especially service businesses – in the US struggle to pay minimum wage, much less anything more, to the staff they need to enable growth. To serve more clients, you need more staff, right?

Well, according to this Daily Stat from Harvard Business Review (12/3/2014), the bigger your business gets, the hard it becomes to increase wages:

The growing size of U.S. businesses may be one reason wages are growing by the sluggish annual rate of 2% even though the jobless rate has fallen sharply, says the Wall Street Journal.

46.3% of private-sector employees now toil for companies with 500 or more workers, up from 44.2% a decade ago, and small businesses have seen their share of employment slip.

Employees are less able to demand higher wages, because, in effect, there is decreased competition for workers, the Journal says.

SOURCE: The Big Business of Small Wage Gains