Unemployment and Wage Growth: Recent Cross-State Evidence
The current economic expansion, now the longest on record, has delivered the lowest unemployment rates in 30 years. Yet nominal wage growth has remained relatively contained. This failure of wages to accelerate more rapidly suggests to some a shift, or even a complete breakdown, in the historical relationship between unemployment and wage growth. However, looking across the years, the relationship between unemployment and wage growth has always been relatively loose, implying that it might take many years to conclusively identify even a significant change in the link between unemployment and wages.