Wage growth still lagging: Is the “Uber effect” to blame?

Feb 02, 2018
AP Photo/Eric Risberg, File

Wage growth finally is perking up, according to Friday’s jobs report from the U.S. Labor Department: Wages grew 2.9 percent over the past year.

Even so, economists are puzzled about why raises haven’t been more robust in an era of full employment, record stock prices and rising home values. In past booms, wages have grown at a pace of 3.5 percent to 4 percent, says Realtor.com senior economist Joseph Kirchner.

He blames the gig economy and the “Uber effect” -- workers increasingly take freelance positions with no benefits, meager pay and little stability.

“Employers have not been forced to bid up wages because they have been able to tap into a large pool of discouraged and underemployed workers,” Kirchner says.

Dean Baker of the Center for Economic Policy Research isn’t so quick to blame the sharing economy.

“I think there is something to the ‘Uber effect,’ but Uber and other pure gig economy actors are a tiny part of it,” Baker says. “The more common issue is larger companies contracting out portions of their business to small firms that pay lower wages.”

And, Baker notes, rock-bottom inflation rates mean workers can get by on lower-than-normal raises. Adjust for inflation, he says, and “real wages are doing somewhat better than the nominal figure indicates.”