We’ve all heard the saying, “records are meant to be broken.” Early in the month of July, the various indexes, which measure the over-all stock market – the NASDAQ, the Dow, AND the S&P 500 indexes – all did just that!
If you were to read through the mainstream news reports or listen to the 6pm national news coverage, you may not get a clear picture of just how strong our economy is. I would argue that it is the strongest it’s been since the late 1990s. I know that doesn’t sound too far in the past, but we would have to look back to 1997 to see economic gains this significant. With 3.2% in economic growth and a jobs report that just came in with a 3.6% unemployment rate, we are starting to get spoiled with all the positive news in the U.S. economy. In fact, here is a stat that has completely blown my mind: since 1969, (THE LAST 50 YEARS) there were only 17 months when our unemployment rate managed to dip below 4%.* Not 17 years out of 50 years, 17 months out of 50 years! Now, this is the part that blew my mind, out of those 17 months, we just lived through 12 straight. What this means is that looking back at history one year ago, there were only five months in the past 49 years that the economy had less than a 4% unemployment rate! Hence, my summation: we are getting spoiled by this great economy that we have.
The great news is that this strong economic undercurrent is starting to be felt in the pockets of Main Street America. NPR.com reported that starting in 2021, Bank of America will implement a national minimum corporate hourly wage of $20. I guess they decided to jump right over the $15 minimum wage fight in which California is currently engaging. When the economy is this strong and the unemployment rate so low, the free market steps up and starts to determine what the fair wage of employment should be. If companies are looking for good quality employees, they are going to have to poach them from other employers. When this happens, employees are not looking to make a move for a $1/hour raise. Right now, people are looking for $4 and $5 an hour raises to leave their current employers, and they’re getting them! The great thing about the pay increase is that it is happening for most industries on a broad scale and unless you are locked into some type of pay contract, wages and benefit packages are starting to go through the roof. The U.S. inflation rate is also fairly low right now, which means these pay increases are actually going right into the pocketbooks of Americans and then into the hands of local retailers. This is causing a self-fulfilling prophesy of more personal earnings generating more personal spending, and translating into continued economic strengthening.
My advice to MCM readers, as we approach annual performance and salary reviews, is to know your worth. In my opinion, if there was ever a time in the past 20 years to raise your hand and ask for a substantial pay increase, the time could be now. With the economy growing at 3.2% and unemployment rate at 4% or below for the last 12 months, employers are desperate for quality workers. This means they need to keep the great workers they have. So, if you were yet to pick up what I’m puttin’ down, I will put it in very simple terms: Ask for that raise!
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Investment advisory services offered through SPC, a registered investment advisor.
OLV Investment Group is independent of Sigma Financial Corporation and SPC. *It is not possible to invest directly into an index. Past performance is no guarantee of future investment performance. This article is for informational purposes only and should not be construed as investment advice.