Weekly wages may be rising faster than believed

Study reveals employers hire lower- paid workers in order to keep bills low

Wages aren’t growing so slowly, after all.

A study by the Federal Reserve Bank of San Francisco found growth in the median weekly pay of workers continuously employed in full- time jobs picked up sharply in 2015 to more than 3% on an annual basis.

By contrast, the 12month rise in average hourly earnings reported by the Labor Department has hovered around 2% for most of the nearly 7year- old recovery.

The report blames the sluggish aggregate gains on changes in the makeup of the labor force, particularly the entry of low- wage workers and the retirement of higher- paid Baby Boomers.

“While high- wage Baby Boomers have

been retiring, lower- wage workers sidelined during the recession have been taking new full- time jobs,” study authors Mary Daly, Bart Hoblin and Benjamin Pyle wrote.

USA TODAY reported similar findings last fall based on data from payroll processor ADP, but this marks the most detailed analysis of the trend by a government agency.

The report separated the median weekly wage growth of full- time workers who stayed employed from changes in earnings because of movements into and out of the labor force.

Many sidelined workers and those with part- time jobs took full- time jobs as the recovery improved but at low wages, while millions of high- paid BabyBoomers retired. Those trends suppressed median gains.

The study concludes that the impact of its wage- growth findings on inflation are unclear.

Though raises have been more robust than believed, employers’ ability to keep overall wage bills low “by replacing or expanding staff with lower- paid workers” could keep a lid on inflation.

The Fed, which raised its benchmark interest rate in December for the first time in nine years, is looking for inflation to pick up to move ahead with further hikes.