Three Signs That Point to Bigger Raises in 2015

All eyes are on wages. For workers who have faced six years of stagnant pay, Federal Reserve officials trying to decide when they can safely raise interest rates, or anyone who wants the US economy to experience a truly robust recovery, the single biggest question about the economy in 2015 is whether pay raises will become more commonplace.

Three pieces of news on Tuesday point to yes.

There are new signs that American workers, especially at the middle and low end of the pay scale, may finally start having enough negotiating leverage to demand wage increases in excess of inflation.

First, the Labor Department's monthly report on job openings, hiring and firing was released, and it showed a continuation of a trend that has been underway for more than a year: In November, employers said they had about 4.97 million openings, up 142,000 from October. They also hired 4.99 million people.

That ratio of openings to people hired matches some of the highest levels on record (though the data go back only to 2002). In other words, employers are saying they have a lot more openings, but seem to be having trouble filling those jobs as quickly as historical patterns would suggest. That suggests they will have to make those jobs more attractive to fill those openings more rapidly, either with higher pay, improved benefits, better working conditions or a combination of these.

The second piece of news is the latest survey from the National Federation of Independent Business. Its members, small businesses around the country, reported the highest level of overall optimism since 2006, and, more to the point, showed that small businesses were expecting to increase worker pay.

The proportion of small businesses planning to increase compensation in the next three months was 17 percentage points higher than those that planned decreases, the widest margin since 2007.

But the most interesting piece of evidence for rising wage pressure was in an announcement by Aetna, the giant health insurer. The company said it would set a minimum hourly pay for its workers at $16 an hour starting in April, which will mean a raise averaging 11 percent for 5,700 claims administrators and other low-level workers. That works out to about $33,000 a year for a person working a 40-hour week.

And next year, the company plans to offer a new health benefits program to lower out-of-pocket expenses for low-income workers that the company says could save employees up to $4,000, essentially combining the raise this year with better benefits next year.

The company is counting on the raise to make it easier to retain good employees and recruit for vacant positions. Turnover is expensive for a company like Aetna, as it must attract and retain thousands of workers who are less likely to feel attachment to a job if it offers rock-bottom pay and few benefits.

Aetna's chief executive, Mark Bertolini, framed the decision as being about more than dollars and cents, assigning Thomas Piketty's inequality tome "Capital" as reading to executives and telling The Wall Street Journal that "it's not just about paying people, it's about the whole social compact."

But if the trends we are seeing elsewhere in the data hold up, including those released Tuesday, it could prove to be a sensible decision purely on business strategy grounds. If job growth continues at its recent pace during the next couple of years, companies that resist raising wages may find themselves at a competitive disadvantage, losing their best workers to companies like Aetna that try to get ahead of the curve a bit with pre-emptive raises.

Nothing is certain. Maybe the path of job growth will slow as we get closer to full employment. Maybe more of the millions of people no longer in the labor force will enter in larger numbers, holding down wages still longer.

But the flow of news Tuesday presents a coherent, consistent story: Employers have lots of openings they need to fill. Small businesses surveyed expect to raise pay in the coming months. And one giant employer is doing exactly that.

Add it up, and Aetna workers may not be the only ones seeing raises this year.