AI Generated Image
Is the 'K-shaped' economy finally over for workers?
USA Today • • business
Key Points:
- Bank of America reports that lower-income households experienced 4.7% annual wage growth last month, outpacing the 3.5% growth seen by higher-income households, despite a slight cooling in the overall labor market.
- This shift suggests a potential reversal of the long-standing "K-shaped" economic pattern, where higher-income earners pull further ahead while lower-income workers lag behind.
- Factors contributing to this change include lower tax withholding from recent legislation and increased job switching among lower-paid, often hourly, workers who typically receive pay raises when changing jobs.
- Treasury Secretary Scott Bessent has declared the end of the K-shaped economy, describing the current trend as a "C" economy where lower-wage earners are beginning to recover ground.
