Research on the Disconnect Between Low Unemployment and Wage Growth in the U.S. and Coping Strategy

Abstract

There has long been significant work available in the U.S. Indeed, unemployment rates have remained extremely low in recent years, but wages still have not. This has been a puzzle to most economists, who in the past have always expected that high employment should increase wages as organizations scramble for human resources. However, due to factors such as labor market density, inflation, technology, and the growth of gig economy jobs, the U.S. labor market has distorted this structure. This paper analyzes the trends in unemployment and wages, taking issues such as regional differences, low-skilled job polarization, and the effect of automation on the workforce into consideration. It also provides recommendations on how to deal with challenges, such as policies to support labor market flexibility, the creation of high-skill employment, and the ability to overcome inflation. The paper includes a synthesis of wage stagnation and realistic strategies to enhance wages in various sectors of the market economy.