For American workers, it's about time. For corporate America, however, it may mean trouble.
After years of seeing salaries stagnate, U.S. earners are finally starting to make slightly more, with signs pointing to further wage increases to come. Yet the additional compensation could be bad news for the businesses that find themselves forced to pay up. The extra labor expense is expected to cut into profit margins, and consequently diminish returns for investors, according to some analysts.
"What's happening is that Wall Street and Main Street have switched places," Eddy Elfenbein of Crossing Wall Street wrote to CNBC. "Workers are finally getting wages while corporate profit growth has stalled. In the early stages of the recovery, it was the other way around—profits soared while jobs stagnated."
Indeed, employee compensation is finally showing signs of life.
In a much heralded boost, average hourly earnings for private workers rose to $24.75 in January, a 2.2 percent year-over-year increase. And thanks to a mix of higher wages and more people working, total compensation of employees in the fourth quarter rose 4.7 percent year over year, according to the revised U.S. growth report report released on Friday.
It's not simply that wages are tracking inflation, either. The Bureau of Labor Statistics reported on Thursday that average hourly earnings rose 2.4 percent in "real" terms from January 2014 to January 2015 (due to recently falling prices that can be pegged on lower energy costs).
On Friday, investors will learn just how much wages rose in February when the latest employment report is released, alongside news on nonfarm payrolls and unemployment.
Of course, it is the big drop in unemployment that is leading to recent increases in compensation. Wage pressures are expected when the unemployment rate falls, given that a lower jobless rate indicates that the supply of labor is decreasing.
And it's not just the hard numbers pointing to compensation boosts. In a splashy move by the world's biggest retailer, Wal-Mart reported last month that it is increasing its lowest wages to $9 per hour by April, and $10 by next February. Ford and TJX Companies have also moved to increase wages.