According to the latest data, wage growth for the lowest-paid workers in the United States has slowed sharply, dropping to the weakest pace in seven years.
Slowdown In Wage Growth
On Tuesday, in a post on X, The Kobeissi Letter shared the latest wage data showing a significant slowdown in wage growth for the lowest-earning tier of Americans, citing data from the Financial Times.
“Wage growth for the lowest-paid workers in the US slowed to +3.7% YoY in June, the lowest in 7 years,” the post says, referring to those who earn less than $806 per week.
The 3.7% growth rate represents a significant decline from the peak seen during the post-pandemic recovery. “That's more than a 50% drop from the +7.5% peak seen in 2022,” the post says, highlighting the steep deceleration in income gains for this group.
Widening Income Inequality
In contrast, high-income workers, that is, those earning more than $1,887 per week, experienced a 4.7% year-over-year wage increase in June. The overall U.S. workforce saw wage growth of 4.3% during the same period.
“The gap between rich and poor is widening,” the post says, underscoring the growing disparities within different sections of the U.S. economy. “This is concerning.”
Labor Market Cracking
This comes amid the latest jobs report by the Bureau of Labor Statistics last week, which showed that the U.S. labor market was under pressure, with non-farm payrolls rising by just 73,000 in July, falling short of estimates at 110,000 by a wide margin.
The report also included massive downward revisions to May and June figures, from 144,000 and 147,000, to just 19,000 and 14,000, respectively.
However, analysts don’t necessarily see it as a recessionary signal, with Robert Ruggirello, CIO at Brave Eagle Wealth Management, saying, “Friday’s jobs report was terrible with recessionary level numbers, but slowing hiring is not new and markets are already looking past it.”
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