The 3 Reasons For Wage Stagnation: Globalization, Temp Work and Automation

If you want a raise in 2018, please don’t hold your breath. You might not make it to 2019.

More than half of Americans haven’t gotten a raise in the past year. The precise number was 52%, according to a study.  That continued a perplexing trend from 2016, when 50% of respondents said they didn’t get a bump in pay.

It’s perplexing because the stock market skyrocketed in 2017 and unemployment hit a 17-year low. In theory, that means the economic outlook is sunny and employers have to draw from a shrinking pool of available workers.

When supply can’t meet demand, the cost of the supply is supposed to go up, right?

The depressing news is there’s no end in sight for the wage stagnation.  “At this pace, the average American in only seeing a pay increase every other year,” said Greg McBride, Bankrate’s chief financial analyst

Since the average household debt is $137,063, that means the battle to manage debt and keep a good credit score will continue to rage.

Here’s a look at what’s behind the drought in raises and what you can do about it.

Why aren’t more people getting raises in a good economy?

Unemployment hit 4.1% in October 2017. That’s a huge drop from the 10.0% it hit eight years earlier during the Great Recession, but it’s a misleading statistic.

As the economy floundered, many people gave up looking for work and were no longer counted as “unemployed.” If you throw them into the equation, the actual unemployment rate is 7.9%.

Companies have gotten used to getting all the labor they need at prices they want to pay. That mindset largely hasn’t changed despite the uptick in the economy.

The gross domestic product expanded at 3.3% in the third quarter of 2017. It was the first time the GDP experienced a growth of 3% or more for two straight quarters since 2014.

The much-ballyhooed tax bill is supposed to further rev the economy, but that might not mean more money in workers’ pockets. A Bloomberg survey of 300 companies found that most will put their tax-cut windfalls toward dividends or buying back their own shares of stock – not toward raises.

The traditional link between low unemployment and higher wages has also been shaken by new trends in employment like globalization, robotics and temporary hiring.


It’s much easier and cheaper now for companies to shift work offshore. The Bank for International Settlements reported in June 2017 that 10% of the decline in U.S. labor costs between 2006 and 2016 was due to the lower cost of labor abroad.

Temporary Employment

Also, more people than ever are doing temporary jobs on a contingent basis. The trend has a name – Gig Economy – and there’s nothing temporary about it.

A study by Intuit predicts by 2020, 40% of American workers will be temporary contractors. They are generally paid less than their “standard” counterparts and don’t receive benefits like health insurance or pension plans.


Then there is the Rise of Robots. The phenomenon has inspired many novels and movies. Anyone who’s seen one of the “Terminator” flicks knows things don’t turn out too well for the humans.

The U.S. labor market doesn’t resemble the apocalyptic battlefield that produced Arnold “I’ll Be Back” Schwarzenegger just yet. There are 1.75 robots for every 1,000 workers, which represents a loss of about 670,000 jobs.

But economists say that figure could multiply four times by 2025, which would mean a loss of 3.4 million jobs. In short, the world is changing and many of the economic forces that benefitted workers are fading away.

How can you improve your chances of getting a raise?

A good way to get a raise is to marry the CEO’s son or daughter. Unfortunately, that’s not a viable option for even the above-average American.

Other strategies like working harder and adding value to your company’s bottom line also carry no guarantees. These days, raises are more tied to what you do and how long you spent learning to do it.

The survey found that 26% of workers with a high school diploma or less got a raise in the past year. For workers with college degrees, it was 36%.

A general rule is the better your education, the higher your pay will be. And the higher your pay, the better your chances will be of getting a raise.

Just 17% of workers earning less than $30,000 a year got raises, compared to 43% of those earning $75,000 or more.

Since robots rarely demand raises or better dental plans, it would pay to get a job that artificial intelligence cannot typically do. Economists call them “high touch” jobs, like hair stylists, nurses, doctors and physical therapists.

It’s not exactly simple to decide to become a proctologist at age 42, of course. If you’re established in a field where raises are rare, your best tact is the old-fashioned one:  Work hard, get good reviews and for God’s sake don’t grope your co-workers.

And before you ask for a raise, do your homework.

Check sites like, or information, including the Department of Labor’s Occupational Outlook Handbook to find out what professionals in your field and geographic area are paid. That way you’ll know what is a reasonable raise request.

Practice your sales pitch. No matter how underpaid you may be, don’t go into your boss’ office with a sense of entitlement.

Broach the subject diplomatically. Point out your contributions and say something like, “I appreciate being able to work here, but I think my value to this company is higher than what I’m receiving.”

Whatever you do, don’t threaten to quit if you don’t get your way unless you actually did marry into the CEO’s family.

How do I get by without a raise?

If you are already getting by, you really have no choice other than to continue staying within your budget and plugging away.

Unfortunately, a lot of people aren’t getting by that well. U.S. household debt rose to an all-time high of $12.84 trillion in the second quarter of 2017. Credit card debt increased 8% to $905 billion, according to a NerdWallet analysis.

That works out to $15,654 for households who use credit cards. It also indicates that millions of Americans are using credit to make ends meet every month. The extra money fills the hole left by wage stagnation. The problem is the “raise” is money they are actually borrowing, and it often comes with budget-busting interest rates.

Millions of consumers have found relief through debt management programs. Their debts are consolidated and a nonprofit company works with creditors to reduce interest rates. The consumer makes one monthly payment, which is less than the combined payments they were previously on the hook for.

Essentially, debt management is making the best of a bad situation. The U.S. economy was mired in one for a long time.

The good news is the wait for an upswing seems to be over. The bad news is that if you’re expecting the good news to produce a raise, you may be waiting a very long time.

Joey Johnston has more than 30 years of experience as a journalist with the Tampa Tribune and St. Petersburg Times. He has won a dozen national writing awards and his work has appeared in the New York Times, Washington Post, Sports Illustrated and People Magazine. He started writing for InCharge Debt Solutions in 2016.

Robots working in a factory


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    1. Corsentino, B. 2017, September 3. These are the ‘robot proof’ jobs of the future: Pew Research. Retrieved from
    2. Tepper, T. 2017, November 14. Did you get a raise this year? You’re one of the lucky ones. Retrieved from
    3. McRae, M. 2017, March 31. Unsettling New Statistics Reveal Just How Quickly Robots Can Replace Human Workers. Retrieved from
    4. Sun, L. 2017, November 20. A Foolish Take: Here’s how much debt the average U.S. household owes. Retrieved from