Why pay rates fall behind America's job growth: 4 things to know

Average hourly earnings in the U.S. were 2.9 percent higher in January than a year earlier, but pay has been slow to move despite job growth for several reasons, The New York Times reports.

Here are four things to know about America's slow wage growth.

1. A decline in union membership for private-sector employees, which fell to 6.5 percent last year from the upper teens in the early 1980s, seems to have contributed to a lack of wage growth. The decline in union membership contributes to slow wage growth partly because unions benefit workers directly — the average pay for workers represented by unions tends to be higher than workers outside of unions.

2. Contract restrictions that keep employees from quitting their jobs for better ones have contributed to reduced wages. These contracts, which were once held for highly paid, highly skilled employees such as physicians and engineers, have expanded to nurses, laborers and retail clerks. Studies show these agreements reduce wages because employees tend to receive the biggest raises when they leave their company or threaten to leave, according to The Times.

3. As state and local governments pass laws raising the minimum wage to as much as $15 an hour, lawmakers have tried to prevent these governments from establishing their own minimum wages, arguing minimum wage growth may eliminate jobs and reduces workers' number of hours on the job. However, recent research indicates a moderate minimum wage increase has little or no effect on overall employment, according to the report.

4. The growth of technology and globalization has made it easier for employers to find cheaper alternatives to raising employees' wages. Technology and globalization also contributed to the rapid decline of American manufacturing jobs after 2000 as China increased power as an exporter.

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