In a recent article, longtime New York Times reporter Steven Greenhouse talks about why most Americans aren’t seeing raises in their paychecks. For unionized workers, raises come about as a result of negotiations with management, but lack of power in bargaining has made these raises fall below the inflation rate.
For non-union workers, Greenhouse shows, companies are adopting strategies to systematically depress raises. The most common are to give managers incentives to keep labor costs down by denying them bonuses if costs rise. The other is to provide pay incentives for higher performing workers (merit pay) while paying everyone else less or giving no raise at all.