By Kerry Close
August 23, 2016
Low-income employees have seen the largest raises since the recession.
Hannelore Foerster—Getty Images

Low-income workers have struggled to make ends meet in the wake of the recession, particularly as they found themselves left behind the rest of the nation’s recovering employees. But their prospects could be on the rise.

Americans who find themselves in the bottom quarter of earners are seeing their wages increase at the highest rate since 2009, the Wall Street Journal reports. The push comes from increased competition for workers, minimum-wage increases in cities like Seattle and San Francisco, and major corporations like McDonald’s and J.P. Morgan Chase announcing that they would give raises to their lowest-paid employees.

In the second quarter, weekly wages for full-time workers in the bottom quarter of earners — those who make about $13 an hour — increased by 3.1% from the previous year, according to the Labor Department. That increase outpaces that of median earners, or those who make about $20 an hour for their full-time jobs.

The raises also coincide with larger pay increases. In July, wages for private-sector workers equaled their largest annual growth rate since 2009. There are also fewer workers available for less desirable jobs: The jobless rate has held steady at or below 5% this year.

While higher wages tend to increase a company’s costs, they can also make it easier to attract better prospects and decrease turnover — which in turn reduces hiring and training costs and bolsters a company’s image. A case in point: When Nationwide raised the minimum wage for its lowest-paid workers last September to $15 an hour from $10.50, said it did so in order to retain its talented employees.

Other companies have followed suit. In an op-ed last month, J.P. Morgan Chase chief executive Jamie Dimon announced in a New York Times op-ed that the company would increase minimum pay for 18,000 workers to at least $12 an hour. Starbucks chief executive Howard Schultz said workers could expect a minimum 5% raise this year. McDonald’s, Wal-Mart and Gap have all made similar announcements in the past few years.



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