HARRISONBURG — The increase in wages and in consumer prices continued to be tit for tat in July, according to the most recent data of its kind from the U.S. Bureau of Labor Statistics.
In the past several decades, price increases have repeatedly outpaced increases in wages. However, since September 2014, wages have more often outpaced prices.
In Rockingham County, the average weekly wage has increased 13% from $785 in the first quarter of 2014 to $887 in the fourth quarter of 2018 — an increase of $107, according to data from the Quarterly Census of Employment and Wages.
Despite some wage increases, many in the Valley still struggle to make ends meet.
Nearly one-third of households in Harrisonburg make an income above the federal poverty level, but not enough for a basic household budget, according to a 2017 report conducted by United Way. These households are considered ALICE, meaning asset limited, income constrained, employed.
On Labor Day, a new community group was launched to recognize businesses that pay their employees a “living wage,” called the Harrisonburg-Rockingham Living Wage Certification organization, according to previous DN-R reports.
“While we celebrate any increase in wages, especially for the ALICE population, we want the general public to understand that many people are still not earning enough to pay for basic needs without outside assistance,” said Chris Hoover Seidel and Ramona Sanders, Living Wage Campaign steering committee members.
In 2018, price increases only outpaced wage increases twice in real average weekly earnings. Prices and average weekly earnings also increased at the same rate three times in 2018.
Nationally, real average hourly earnings increased through May and June from $10.90 to $10.93. This increase is also seen in larger weekly payments made to workers from $375.07 to $375.93.
July’s average hourly earnings of $10.92 declined a penny from June’s $10.93 and average real weekly earnings in July stood at $374.65.
A year before, the real average hourly earnings were $10.78, and weekly earnings were $371.75.
“It really stems from the Great Recession, when companies were going out of business right and left and people were being laid off by the 10,000s,” said Michael Randle, the owner and publisher of Southern Business and Development Magazine. “I think companies have used that as an excuse to not raise wages.”
However, the difficulty in finding workers has often forced companies to pay workers more, Randle said.
“Labor is so tight right now that wages will undoubtedly go up and continue to do so,” he said.
Employers faced similar difficulty finding workers in the 1990s.
“Companies would simply loot other employees from other competitors or whatever and then those jobs are not replaced” he said. “We’re in that situation now.”
And the wage increases workers are seeing will only continue to rise.
“Given that the Great Recession is 10 years out, you’re going to see wages increase dramatically,” Randle said. “I think 4 to 5% a year unless we hit a recession.”
There are three options for business and the country to grapple with the labor supply moving forward, according to Randle.
One is to accept lower economic growth because of the lack of labor. Another option is subsidize families with tax credits to encourage the birth of more children. And the third option is to embrace immigration.
“We are not doing any of those things,” Randle said.