Weak Pay Growth Puzzles Fed Chief, Just Like Everyone Else

[ucbruin]

Halfway through a news conference Wednesday, the head of the world’s most powerful central bank was asked a question weighing on the minds — and the checking accounts — of Americans everywhere:

When will people finally start getting meaningful pay raises?

Jerome Powell, the chairman of the Federal Reserve, had no satisfactory answer.

He called it a “puzzle.” And then, as if measuring his words, he said he wasn’t prepared to call it a “mystery.”


https://apnews.com/93e2f70362134b4f...th-puzzles-Fed-chief,-just-like-everyone-else

Whatever he ends up calling it....
If incomes don't rise soon and substantially....
I'll say it sucks....

 

[Randolph Kinney]

With globalization and automation, wages are subdued. No mystery. The middle class has been extinguished and replaced with government support programs.

The low U.S. labor force participation rate has several causes, but a major one is the disincentive to work created by government programs.

The so-called labor-force participation rate of such workers, ages 25 to 54, fell sharply after the financial crisis to a recent low of 80.7% in the third quarter of 2015. The figure has increased since then to 81.7% in the fourth quarter of last year.

Hourly wages would have to be $25 an hour to draw people back into the labor force.

 

[Randolph Kinney]

The number of foreign-born workers in the U.S. labor force has reached 27.4 million, or 17.1 percent of the total number of workers, according to figures released this month by the Bureau of Labor Statistics.

The annual report includes foreign-born workers who are in the country legally and illegally, as well as students, refugees and those who may be temporary workers. The data does not separate out the number of undocumented workers in the country.

According to the BLS, the unemployment rate for foreign-born workers was lower than that of workers who were U.S. natives.

https://www.seattletimes.com/explore/careers/immigrants-now-make-up-17-of-the-u-s-labor-force/

 

[Carnivore]

Halfway through a news conference Wednesday, the head of the world’s most powerful central bank was asked a question weighing on the minds — and the checking accounts — of Americans everywhere:

When will people finally start getting meaningful pay raises?

Jerome Powell, the chairman of the Federal Reserve, had no satisfactory answer.

He called it a “puzzle.” And then, as if measuring his words, he said he wasn’t prepared to call it a “mystery.”


https://apnews.com/93e2f70362134b4f...th-puzzles-Fed-chief,-just-like-everyone-else

Whatever he ends up calling it....
If incomes don't rise soon and substantially....
I'll say it sucks....

Minimum wage in my area is really about $9 bucks and hour. Thats not the real minimum by law, thats market forces causing employers to pay that much to fill entry level. Our some being paid 7-8 bucks yes, but thats because many entry level people are not paying attention. Even at 9 bucks a single person entry level here can not live on that...Rents are rising dramatically and there are waiting list. We have zero vacancy.

 

[Joe Flacco]

I think wage increase probably weak until labor force participation normalizes. Gotta get people back to work. Don't worry, period of economic prosperity coming.

 

[Michigan CG]

I think wage increase probably weak until labor force participation normalizes. Gotta get people back to work.

My thoughts exactly. There is no reason for the 25-54 group to not have more people in the workforce. Time to get some of those kids with their Masters in Russian Feminist Dance studies out of the basement.

 

[Mark K]

Its no mystery. Think Globalization. When wages, hence the cost of production, reach a certain point here in the US, the product being made or service provided will be outsourced. Not all products/services can be outsourced so that is where you'll find wage increases. Otherwise, wages will stabilize at the point where foreign labor plus the costs associated with it are approximately equal. Not rocket surgery.

Foreign workers assemble everyone's favorite I-Phone for about $2 an hour or less. That's pretty cheap and the shipping isn't that expensive.

 

[Artemis Fowl]

"I don't care...just need bodies...would be happy with anyone who will show up for work and can pass the pee test."
- Contractor I know

 

[Gobears81]

Don't worry, period of economic prosperity coming.

When I was in Chicago last, I couldn't help but conclude that this IS the period of economic prosperity. But wages are simply not being distributed in the same way that they were in the 60s, 70s, and 80s. This could be largely based on globalization, as Mark K noted, as well as automation/ technology posing a threat to many classes of workers.

rocket surgery.

 

[Joe Flacco]

When I was in Chicago last, I couldn't help but conclude that this IS the period of economic prosperity. But wages are simply not being distributed in the same way that they were in the 60s, 70s, and 80s. This could be largely based on globalization, as Mark K noted, as well as automation/ technology posing a threat to many classes of workers.

You and I have not experienced a period of economic prosperity as adults. We only experienced pain. Entered 20's with the dot com bubble bursting and then later 20's financial crisis. Our time of economic prosperity is ahead.