Robust US job market not producing better pay

Bloomberg

Growth in Americans’ wages has been leveling off lately, contrary to expectations that a steadily falling jobless rate will quickly lead to a sustained acceleration. Blame it on dismal productivity and lingering, albeit diminishing, slack even with unemployment at an almost 10-year low of 4.5 percent.
The government’s most recent jobs report showed the underemployment rate — the broadest gauge of joblessness because it also includes marginally attached workers and those working part time who’d prefer a full-time position — also has been falling though it’s still higher than just before the 2007-2009 recession.
Data this week were also less encouraging. The quits rate, a gauge of workers’ willingness to voluntarily leave their jobs because they’re confident of finding a better position, eased in February to 2.1 percent, matching its average since the end of 2015. Faster turnover would imply workers are able to bargain for more as labor demand exceeds supply.
Weak productivity is also behind employers’ reluctance to fatten paychecks. Because firms are hiring
lots of workers and output is expanding slowly, they’re trying to protect their profits at a time when raising prices has become difficult. Over the last five years, productivity growth has averaged 0.7 percent a quarter, the slowest since a similar period ending 1982. That “is certainly dampening” wage gains, Joseph LaVorgna, chief US economist for Deutsche Bank Securities, wrote in a note to clients.
Federal Reserve Chair Janet Yellen this week called low productivity a “significant problem” and said the reasons behind it were unclear, making it hard to predict when there’d be a pickup.