What happened to pay raises?

Slate.com

U.S. companies “have literally forgotten” how to compete for employees, said Daniel Gross. The demand for workers is so high right now that airlines have canceled flights, homebuilders have slowed down construction, and farmers fret that crops will go unharvested—all for lack of qualified hands. There are currently 5.7 million job openings in the U.S., twice the level of eight years ago, and the unemployment rate is a very low 4.4 percent. “Given these conditions, wages should be rising sharply.” Yet pay has barely budged for most Americans. Employers don’t appear willing to increase wages to attract candidates, and employees “either won’t or can’t demand more.” The reason for this puzzling state of affairs “may be

psychological”—the pain of the financial crisis is still fresh in our minds. Just as the Great Depression left scars that “influenced consumer and investor behavior for decades,” the financial crisis and subsequent recession “inflicted similarly deep wounds.” Businesses went into “survival mode,” laying off workers and cutting back benefits for those they kept. Years later, that mentality has “hardened into something like a permanent mindset” and is baked into business models and projections. Meanwhile, workers traumatized by layoffs, foreclosures, and pulverized savings learned to take any job they could get and “hold on to it for dear life.” The result is a “mutually reinforcing feedback loop” that leaves both sides dissatisfied.