Business Trends

U.S. Employment and Wage Growth Accelerating

Data from retirement clients shows tightening of labor market

September 23, 2015 — DES MOINES, Iowa–(BUSINESS WIRE)–Wage growth acceleration should soon be reflected in the largest of U.S. government surveys, according to researchers from Principal Global Investors.

Chief Global Economist Bob Baur and Senior Global Economist Robin Anderson analyzed new data from the retirement plan clients of the Principal Financial Group® and found that wage growth for this group is accelerating faster than what the U.S. government surveys show. As the labor market continues to tighten, it will create an “employees’ market.”

“Indicators for job openings, hiring plans and actual compensation are near cyclical highs,” said Baur. “Wage growth is a key sign of economic growth. It boosts consumer spending, expands business revenue and encourages business investment. All of this signals that the U.S. economy could be strong enough for the Federal Reserve to start raising interest rates this year.”

As the economy starts to improve, especially as more people move into full-time work, we will see wage growth in government series look more like what we are seeing in our data

Findings include:

  • Retirement client data shows wage growth is well ahead of U.S. government surveys and that broad wage growth may finally be starting to accelerate
  • Principal Global Investors’ economists’ research confirms continuing wage growth from previous report — the latest data from The Principal shows wages up 3.8%
  • Employment and wage data from The Principal show improvement in the labor market, evidence that the market is strong enough for the Fed to start raising rates this year

While the data from The Principal trends toward small-to-medium sized business, full-time and slightly older workers, the results show the labor market is improving.

“We continue to see strong trends in wage growth in our data. This aligns with lesser known but more predictive government series,” said Anderson. “As the economy starts to improve, especially as more people move into full-time work, we will see wage growth in government series look more like what we are seeing in our data.”

This paper is a continuation of research released in January predicting wage growth that has since manifested in some government reports. The new research foresees a continuation of that wage growth at an accelerated rate.

Read the full report here.




About Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $346.2 billion in assets1 primarily for retirement plans and other institutional clients2.
About the Principal Financial Group
The Principal Financial Group® (The Principal®)3 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $539.9 billion in assets under management4 and serves some 20.1 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit
1 As of June 30, 2015.
2 Principal Global Investors is the asset management arm of the Principal Financial Group® (The Principal®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Enterprise Capital, LLC; Liongate Capital Management LLP; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal and assets managed in accordance with investment advice provided by Principal Global Investors through the delivery of a model.
3 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
4 As of June 30, 2015.