Weak Pay Growth Puzzles Fed Chief, Just Like Everyone Else

[djd09]

 

[chad hampton]

I haven't read through the entire thread, but why would the fed chief be puzzled? We've had 40 straight years of a econ policy that is meant to funnel money to the top and investor crowd at the expense of the general public. We're currently living through one of the greatest examples of wealth redistribution in the history of the country. It's just not going in the direction some of you think. You've been lied to. Once you realize that, it becomes clear.

 

[Riick]

The USA has the highest incarceration rate in the world ( 4 x that of the other developed nations.)high mental illness and addiction rate, high homicide rate etc. When we have school shootings a regular occurrence and hordes of homeless/alcoholics ( a number of whom are vets ) living on the streets and prisons acting as defacto mental hospitals, its hard for us to lecture other nations about their problems or hold ourselves up as an example.

Question: If it's so terrible here, why do all these people try to move here?
Answer: Because with all our faults, it's much worse, with fewer opportunities, in their native countries.

• Democracy & Capitalism, are perhaps the 2 worst systems available, except for all the others.

.

 

[Randolph Kinney]

Jul 11, 2018

The highest retail fuel prices in years may threaten U.S. economic growth, writes The Wall Street Journal’s Stephanie Yang.

Drivers across the U.S. have paid as much as $2.96 a gallon on average this year, the most since 2014.

With wages in the U.S. climbing, Americans have so far been able to weather the higher prices.

https://blogs.wsj.com/moneybeat/2018/07/11/energy-journal-rising-fuel-prices-threaten-u-s-growth/

 

[Randolph Kinney]

U. S. inflation hit its highest rate in more than six years, with rising consumer prices eating away at modest wage gains for American workers. Prices rose 2.9% in June from a year earlier, the fastest pace since February 2012, Paul Kiernan reports. For a second month in a row, annual inflation fully offset average hourly wage growth over the previous year. Production and nonsupervisory employees, a category which includes blue-collar workers, saw their real average hourly wages fall 0.2% in June from a year earlier after a similar slip in May. The big question: How much are workers benefiting from an economy that by many other measures is booming?

 

[Deleted member 128537]

The only way we will see real wage growth is to move toward a more production/manufacturing based economy. Service jobs generally don’t pay much. And that is probably the main reason wages haven’t grown much. In areas where skilled labor is needed I’ll bet they have increased significantly more. In areas where minimal skills are needed wage growth probably has not grown much because it is easier to automate low skilled labor.

That’s just my gut feeling. Would be interested to see an economic study of it.

Example:
Notice those self scanning checkouts at Walmart? They don’t replace high skilled labor, but low skilled.

Once wages of low skilled labor reach a certain point business looks for ways to cut costs because their margins are too low to increase wages. Microeconomic principle: Remember where marginal costs equals marginal revenue profit is maximized. When wages rise in service products that are elastic prices can’t go up to offset the costs. The point is that if prices go up and revenue goes down then that will not pay for the increased wage costs. Prices and wages can only move in the same direction with ease in inelastic products.

Also prime example is the city where my daughter is a Chiroprator in Richmond, Indiana. It used to be a booming town with all kinds of manufacturing and a healthy middle class. Since NAFTA and other trade policies those jobs have largely left which has gutted the middle class in the city. One can go up and down the streets and neighborhoods and see the economic blight.

Recently there has been some manufacturing moving back. But it has to move back significantly.

 

[Restrain]

Florida routinely bemoans the growth of manufacturing etc. however the licensing and other regulations directly negatively impact new business growth. You want to build a new hospital because of population growth? Can’t get it past the Hospital board because other hospitals sue because it affects their bottom line. Want to start a small contracting firm? Figure years plus thousands in fees and licenses.

As long as government regulations adversely affect business growth, wages will stagnant.

 

[ucbruin]

Walmart's pay-advance app Even used by 200,000 employees

"Walmart pays about 25% of the employees’ monthly subscription fees for Even. Schlossberg wouldn’t say what the subscription fee is, but said it generally costs less than Netflix."

"The real problem, Schlossberg said, is that incomes have remained steady while the costs of housing, education and healthcare have multiplied."


https://www.americanbanker.com/news/walmarts-pay-advance-app-even-used-by-200-000-employees

 

[Randolph Kinney]

U.S. workers received their biggest pay increases in nearly a decade over the 12 months through June. That's the latest sign a strong labor market is boosting wages as employers compete for scarcer workers, Harriet Torry reports. The Labor Department’s employment-cost index for the second quarter rose 2.8% from a year earlier. Big caveats: 1.) Wages are still growing modestly, and certainly not as rapidly as before the recession. 2.) Inflation also is rising at a faster pace, eroding worker wage gains. Next up: The Labor Department's jobs report for July is out Friday at 8:30 a.m. ET. Look to see if average hourly earnings pick up further.

 

[Randolph Kinney]

Last month, the share of Americans with a job, known as the employment-to-population ratio, ticked up to the highest level since January 2009. For prime-age workers—which excludes people more likely to be in school or retired—the rate was the highest since May 2008. E-pop has been slowly climbing as unemployment falls, but remains below its peak. That suggests there are still potential workers lurking on the sidelines of the labor force.