The August jobs report from the Bureau of Labor Statistics Friday morning had some bright spots, but wages were not among them.

Average hourly earnings — the broadest measure of compensation for working in this economy — were up just 3.1% year-over-year last month. That’s the slowest pace in more than five years. And there has been a pretty sharp slowdown in just the past six months.

Wages were growing 3.7% year-over-year back in February. And that’s the same period — since the Iran war started — when prices spiked higher for everything from gas to groceries.

As I was working on this story at the office Friday morning, I kept getting interrupted by workers from a local HVAC firm installing new cables and ductwork in the ceiling above my desk.

So, I figured I might as well ask them: how’s the job going, compensation-wise?

“I mean, trending in the last couple of years, I’ve been getting consistent raises, but it doesn’t seem to really affect how much money that I’m able to spend,” said Kyle Wallis, a journeyman controls technician. “It’s like, I make more and more every year, but everything else is more and more expensive.”

Since spring, after the Iran war started, wages have been losing ground to prices, according to Kyle Moore, chief economist at The Century Foundation.

“The American worker is working harder, productivity is up, wage growth is tepid, prices are continuing to rise,” Moore said.

Wages are tepid for a few reasons, starting with the “low-hire, low-fire” job market, which has made workers hesitant to quit, said Bill Adams, chief U.S. economist at Fifth Third Commercial bank.

“And one of the big drivers of workers getting higher wages is when they switch jobs to a higher-paying one,” Adams said.

So, what would generate more wage growth?

“A job market with more competition among employers for workers,” he said.

But right now, it’s employers who have all the leverage. Frank Fiorille, vice president of risk and compliance at small-business payroll processor Paychex has one idea why: “Maybe the threat of AI is preventing people from asking for wage increases,” he said.

So, is there any light at the end of this wage-growth tunnel?

Fiorille said weekly wages are rising for small-business workers. They’re working more hours, because their employers “are trying to squeeze out as much from the existing folks that they have,” he said. “Sooner or later that leads to more hiring.”

Add that to Friday’s out-of-the-ballpark 162,000 new jobs from the jobs report, and Adams said there is likely to be more job creation and more demand for workers going forward.

“So, that means the job market is likely to tighten over the next 12 months,” he said.

Which Adams predicts will push wage growth higher again.

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