The sweet-spot for getting a bigger pay raise appears to be at the bottom of the income barrel.
America's lowest-paid workers are seeing the greatest wage gains, thanks to a combination of minimum-wage hikes around the U.S. and growing employer demand for low-skilled workers. People who work in industries paying less than $12.50 an hour saw their hourly wages rise by 3.2 percent over the past year, or more than 1 percentage point higher than the entire job market, according to research from Goldman Sachs (GS).
The increase comes amid a push from labor activists and economists to boost the wages for America's lowest earners, given the pain caused by the intersection of higher living costs and what had been stagnant or even declining pay. The "Fight for $15" movement has gained supporters from workers in a wide range of industries, such as academia -- where some adjuncts make less than the minimum wage -- and fast-food employees, with the argument that the lowest-paid Americans need to make a living wage.
"Wage growth has been sturdier recently at the low end," according to the Goldman note. "This pickup is consistent with announced pay increases from firms such Walmart and McDonald's and with state-level minimum wage hikes that have taken effect in the last year."
That boost might influence the Federal Reserve's decision on when to raise interest rates, given that Chair Janet Yellen has been monitoring job growth and wage gains amid concerns that the labor market remains weak.
Although employers have been adding jobs and hiring, some economists have concerns over the quality of the jobs as well as whether hidden "slack" is depressing wages. A sizable chunk of the American workforce has been sidelined during the recovery and are counted as "underemployed," but are now entering the job market.
Private businesses added 237,000 jobs in June, up from 203,000 in May, payroll processor ADP said on Wednesday. Average hourly earnings are expected to show an increase of 2.2 percent this year through June, Reuters noted, citing a poll of economists made before U.S. Labor Department's monthly employment report is released on Thursday.
Workers who haven't yet seen raises may want to sit tight.
"The tightening labor market will lead to higher wages, supporting consumer spending growth," economists with PNC Financial Group wrote in a note on Wednesday.
When will wage growth get back to pre-recession levels? It's unclear, with Goldman predicting wage increases of 2.75 percent to 3 percent by year-end. While that's better than nothing, it's still below what's considered a "normal" range of 3 percent to 4 percent.