Workers see fastest wage growth since 2008

WASHINGTON — U.S. workers are seeing the largest wage increase in a decade, the Labor Department reported Wednesday, as companies compete harder for employees than they did in recent years.

The typical worker received a 2.9 percent raise from September 2017 to September 2018, according to the Labor Department’s Employment Cost Index, a widely watched measure of pay. It’s the biggest increase since the year that ended in September 2008, during which wages rose 3.1 percent.

Sluggish pay growth has been one of the biggest problems in this recovery, but employers are finally having to hike wages at a more normal level typically seen during good economic times.

Unemployment is at a 49-year low and there are more job openings than jobless Americans, which forces companies to fight for available workers.

“Wages are grinding higher as the labor market continues to tighten,” said Justin Weidner, an economist at Deutsche Bank. “Wage growth is likely to be over 3 percent again soon.”

On Friday, the Labor Department will release the other most-watched wage metric: average hourly earnings. Many economists expect that will be above 3 percent for the first time since April 2009.

“How hot is the labor market? Hot enough for employers to pony up some more cash to get workers to come work for them,” wrote Chris Rupkey, chief financial economist at MUFG Union Bank, in a note to clients.

In a sign companies are struggling to find enough workers, just 23 percent of companies said their firms are not have any trouble hiring, down from 42 percent a year ago, according to a survey by the National Association for Business Economics released this week.