Whether salaries increase or decrease is important to economic growth and affects both hiring managers and employees. We recently wrote a blog post discussing the current trend of wages remaining low, citing four reasons for stagnant or decreasing wages: less demand by employers, technology that improves productivity, lack of commitment among employers and the growth of low-wage industries.
Now we want to expand on the subject of low wages and the recent news that consumer confidence levels rose in August to their highest level since the financial crisis. These two economic trends seem to be at odds with another, a dilemma that a recent Forbes article by Lauren Lorenzetti explores.
Lorenzetti explains that the Conference Board Consumer Confidence Index increased to 92.4 in August, up a couple of points from July, representing the "strongest reading since October 2007."
However, the economic recovery still continues slowly, and the job market has not vastly improved. In fact, the number of workers expecting to receive pay raises decreased in August to 15.5 percent from July's figure of 17.7 percent. Similarly, consumers expect their wages to drop, reports The Conference Board.
Lynn Franco, director of economic indicators at The Conference Board, highlighted the impact of decreasing salaries and wages, saying: "Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings."
What the Forbes article makes clear is that rising consumer confidence alone is not enough to demonstrate robust economic growth. When other economic indicators catch up with consumer confidence, that will be a sign of stronger economic growth.