Eight possible explanations and not a single mention of the word "deflation." The Japanese have a long history of low unemployment and deflation working together: http://www.tradingeconomics.com/japan/unemployment-rate Maybe the idea that lower unemployment always leads to inflation is just wrong. For now, wage decreases have been masked by cuts to employer-funded health insurance programs. Eventually, there will be…
Shouldn't deflation come with decreasing prices all around, not just wages ? because except for a few relative small sectors, it doesn't seem to be the case.
Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
51–60 of 149 posts
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#52Earlier quoted context omitted.
Explain to me the "value" of Goldman Sachs telling their customers to buy derivatives, while shorting them at the same time. Pretty please.
One, or even many examples of bad behavior does not invalidate the general argument of the wealthy creating value. Don't forget you're on a site owned by wealthy people whose day job is giving money to other people to bootstrap their companies. You don't get much more creating value than that.
- more and more capital is being tied up in parasitic activity (encouraged by monetary and fiscal policies), instead of being invested in startups, infrastructure, etc.
- all profits/capital gains are distributed to capital holders (out of proportion)
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#53Well, if Labor is a function of supply and demand, then it tells us that supply of willing labor is happy to work at all , even if wages aren't rising. Turned around, in a market where people are desperate for work, corporations have no incentive to raise wages. Still, this is overly simplistic. The problem in my mind is that unemployment rate is reflective only of those looking for work, and labor force participatio…
They can't get enough qualified people.
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#54The rules regarding unemployment statistics are entirely designed to be favorable. Citizens who are unemployed for greater than X months (where X is a figure I don't currently recall) stop being considered unemployed for the sake of this stat. Likewise, homeless populations are not counted. Not everyone who is homeless is necessarily unemployed, I guess, but it's patently ridiculous not to include any homeless in une…
Unemployment rate is job-seekers/(job-seekers + employed). Long term job seekers should technically be included (many are) but when they can't find a job long term, they tend to re-classify as students, stay-at-home parents, early retirees, disabled...
In practice, that statistic is usually most relevant for estimating the number of people receiving unemployment benefit. The data collection is intimately tied to this: you don't need to tell anyone you're unemployed unless you are applying for a benefit. Places (eg Ireland) with generous unemployment packages will generally register a higher unemployemnet rate because people have more of a good reason to register as unemployed, even if they expect to be re-employed quickly. Places (eg US) with much more generous disability benefits than unemployment payments will have a lower unemployement rate as people (that are borderline cases) have a strong need/incentive to be classed disabled. Australia has generous student welfare programs, this reduces measured youth unemployment. Etc. ad infinitum
Basically, unemployment is a measure of (more or less) unemployment welfare recipients/applicants. It can't be used to compare between regimes.
It also happens to be an unreliable lead indicator for short term labour market changes. I think this is what has given it its current usage.
What the press should be reporting on is employment rate: Employees/18-65_Adults. This is not gameable, and it means the same thing in every time and place. It measures what people care about when they report on unemployment rate. Alternatively, they could also report "total salary" for the country. That's how most markets get measured (eg total oil sold, total market returns, etc.).
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#55Eight possible explanations and not a single mention of the word "deflation." The Japanese have a long history of low unemployment and deflation working together: http://www.tradingeconomics.com/japan/unemployment-rate Maybe the idea that lower unemployment always leads to inflation is just wrong. For now, wage decreases have been masked by cuts to employer-funded health insurance programs. Eventually, there will be…
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#56Uh, because we are all collectively being fleeced by a ruling class extracting obscene amounts of wealth from our work without doing anything useful themselves. Never fool yourself into thinking you'll get anything back from these vampires.
We had a ruling class in the 90s as well, but wages increased. So the question is what is different about today?
- global demand markets to sell to
- global labor markets to pick from
I guess saying that makes me a xenophobe or some such, but I guess I will have to live with it :-)
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#57It's a complex topic but a click-bait-y title. It's basically looking at nominal wage growth and comparing it to periods where we had higher inflation. It's poor journalism (potentially intentionally misleading?) to not focus on real wages.
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#58Well, if Labor is a function of supply and demand, then it tells us that supply of willing labor is happy to work at all , even if wages aren't rising. Turned around, in a market where people are desperate for work, corporations have no incentive to raise wages. Still, this is overly simplistic. The problem in my mind is that unemployment rate is reflective only of those looking for work, and labor force participatio…
This is true, high skilled employers have lots of trouble finding high skilled workers, and one of the main economic incentives driving gender and ethnic equality in high tech work places is the disadvantage of not being able to have the maximum amount of resources to pool skilled workforces from. They can't get enough qualified people.
...for the price they are offering.
There, fixed it for ya :-)
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#59The widely published unemployment number only measures the dynamics of layoffs (how many people became unemployed in the window of the past 6 months). The actual labor force participation is what counts. And therein lies the answer to the "why isn't pay rising" question: http://www.tradingeconomics.com/united-states/labor-force-pa... (switch to the 10-year time view)
How does a declining labor force participation explain stagnant wages? As participation (supply) goes down, wages should start to go up (to entice people back into the labor force). What we have is declining participation AND stagnant wages.
Re: Unemployment in the U.S. Is Falling, So Why Isn’t Pay Rising?
#60This reminds me of the recent American Airlines story where they raised employee wages and institutional investors hammered them for it http://www.latimes.com/business/la-fi-american-airlines-rais...