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Americans' paychecks are rising at their fastest rate in 9 years

Amazon hikes minimum wage to $15 for U.S. workers
Amazon hikes minimum wage to $15 for U.S. wor... 01:13

Among the rosy employment statistics in Friday's monthly hiring report, one especially shines: Worker wages in the U.S. are finally taking off.

Average hourly earnings in October grew 3.1 percent from ago, federal data show. That's the first time wage growth has crossed the 3 percent mark since April 2009, when the economy was reeling from the housing crash. Earnings for non-bosses (a category the Labor Department calls "production and non-supervisory workers" and excludes managers), grew even faster at 3.2 percent.

The big question: Will it last?

As economists often note, one month doesn't make a trend, and the government's monthly jobs numbers are volatile. Thanks to the hurricanes last month and at this same time last year, some of the wage growth could amount statistical noise, some experts think.

"Wage growth is getting faster, but annual growth is probably closer to 2.9 percent than 3.1 percent due to abnormally low wages last October (likely weather related)," said Ben Zipperer, an economist at the left-leaning Economic Policy Institute, on Twitter.

The October wage figures are the latest in a string of positive data indicating that workers' paychecks are—finally—getting fatter. Separate Labor Department data released earlier this week showed that salaries in the third quarter were, on average, 2.9 percent higher than last year's.

At least in the short term, that trend should continue. PNC Bank predicts wage growth to average 3.3 percent next year, bringing it on par with 2007. Given that the number of job openings around the U.S. has exceeded the number of job-seekers since March, it's likely businesses will have to try work harder to attract employees, said PNC Senior Economist Bill Adams.  

"A tight labor market causes employers to compete for the workers they want to attract and retain, and one way they compete is on salary," Adams said.

"It's been a very long and frustratingly slow recovery from the Great Recession, but it's improved every year since then, and we're finally in a situation where it's a good labor market for workers again."

Another factor boosting wages beyond the strong job market: Some of America's largest employers are upping what they pay. After sustained pressure from labor activists and lawmakers such as Sen. Bernie Sanders, I.-Vermont, Amazon last month said it would raise its minimum wage to $15 an hour. That move affects some 350,000 full- and part-time workers. And in January, the minimum wage will increase in 18 states.

If employees are pleased with their higher paychecks, financial markets tend to get nervous when wages climb too much since they're believed to lead to inflation. Not all economists buy that theory.

"Businesses tend to pass on higher costs by raising the costs of the things that they sell. And if all businesses do that at the same time, that's inflation," Adams said. 

Excluding the price of food and gas, which tends to be volatile, inflation is rising at a rate of just over 2 percent this year after several years near zero.

Whether higher paychecks will help Americans stay ahead of inflation or cause it to rise faster is a matter of debate. But one thing that could keep inflation contained even as wages rise is the dominance of large businesses in the U.S. economy. Businesses as big as Amazon often have margins that allow them to raise pay without blowing up prices, some economists say.

"Many large businesses will be able to absorb the higher costs without passing them on to the consumers," said Julia Pollak, a labor economist with ZipRecruiter. "I don't think the wage growth will put a brake on economic growth. If anything it'll fuel consumption and further spur growth."

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