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The rich world needs higher real wage growth

economist.com

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Re: The rich world needs higher real wage growth

#161

Post by pg_bot »

pknopf wrote: post #9

What exactly (as if anyone can know) caused the wage growth and productivity to split in the 1970s? Was Nixon's complete split from the gold standard a factor at all?

I would say the two greatest factors are an increased supply of low skilled labor globally, and the rise of the computer. First world labor competes on productivity to make up for the cost differential of third world labor which wasn't competing in the global marketplace prior to the 70's. Firms "chase the cheapest needle" and as economies develop wages increase for the local population. As wealth accumulates in these countries they transition into innovation based economies and the cycle continues until no more cheap labor in politically stable countries can be found. At that point wages begin to increase along with productivity.

A lot of people forget several billion people have been lifted out of extreme poverty over the past 45 years. These people compete against you in the global marketplace and affect the prices we pay for goods and services.

Re: The rich world needs higher real wage growth

#162

Post by droidist2 »

_ptgt wrote: post #103
dalbasal wrote: post #60

Earlier quoted context omitted.

..extra point. This is the most ridiculous part: Continued tightening in labour markets might yet boost workers’ bargaining power enough for that to happen, as was the case during the late 1990s and late 2000s, two unusual periods in which labour’s share of GDP rose across the rich world. Labour’s share of GDP is a fraction. labour/gdp. you can make it bigger by having higher wages or lower gdp. Anyone remember 1999…

Ehhh, I think you're fudging the causality here and reading your own incorrect perspective into the article. Recessions hit the lowest rungs of the economic ladder hardest, and those same rungs are last to fully get in on the recovery. Hence, labor's share of GDP tends to be highest at the end of the business cycle... which necessarily coincides with an imminent recession.

Or is it that when wages rise and inflation kicks in, the Fed raises rates to "cool off" the economy, and then the recession comes?

Re: The rich world needs higher real wage growth

#163

Post by randomdata »

knuththetruth wrote: post #50
pknopf wrote: post #9

What exactly (as if anyone can know) caused the wage growth and productivity to split in the 1970s? Was Nixon's complete split from the gold standard a factor at all?

The destruction of unions and other forms of organized labor. Without any strong, organized resistance to Capital owners, they were free to redirect more and more of the profits from productivity gains to themselves. The resulting disparity created a kind of feedback loop that further entrenched the power of Capital owners, as some of the excess wealth they now possessed could be put to use subverting the American po…

Why did Canada's wages stop growing at the same time, even though unions continued to strengthen until the mid-1980s, when it peaked at nearly 40% of the workforce?

Re: The rich world needs higher real wage growth

#164

Post by xg15 »

AnthonyMouse wrote: post #150
JumpCrisscross wrote: post #61

Earlier quoted context omitted.

> Are "labour market running hot" or "central bank tightening" references to actual things Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. “Central bank tightening” refers to…

> “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. If you reallocate money without creating new currency, what you get isn't really inflation. Prices may adjust because the demand for things lower income people buy increases and the demand for things higher income people buy decreases, and prices follow demand. But supply and demand isn't inflation. A…

Even if it did, using that as a reason to not increase wages seems like a recipe for irreversible inequality. E.g. if lowering wages is encouraged (because it decreases labour cost) and rising wages is discouraged (because it increases inflation) then how exactly should income ever become more equalized?

Re: The rich world needs higher real wage growth

#165

Post by mlthoughts2018 »

samatman wrote: post #151
mlthoughts2018 wrote: post #28

Earlier quoted context omitted.

But why does everyone want to move to dense urban areas? You assume that there’s some small, easy-to-offset group of factors, like public transit or “jobs programs,” and that if the government just did something with these things, it would equilibrate population dynamics appropriately. I’m not convinced. I think people are more driven by status symbols and glamor. Living in a city is considered relatively more “high…

Google has a large office in Ann Arbor, so Grand Rapids was an odd choice here.

Why?

Re: The rich world needs higher real wage growth

#166

Post by JumpCrisscross »

AnthonyMouse wrote: post #150
JumpCrisscross wrote: post #61

Earlier quoted context omitted.

> Are "labour market running hot" or "central bank tightening" references to actual things Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. “Central bank tightening” refers to…

> “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. If you reallocate money without creating new currency, what you get isn't really inflation. Prices may adjust because the demand for things lower income people buy increases and the demand for things higher income people buy decreases, and prices follow demand. But supply and demand isn't inflation. A…

> If you reallocate money without creating new currency, what you get isn't really inflation

You’re forgetting about velocity. A dollar in a middle class earner’s hands gets spent faster than a dollar in a billionaire’s. That faster spending stokes both growth and inflation.

Re: The rich world needs higher real wage growth

#167

Post by CPAhem »

JumpCrisscross wrote: post #61
dalbasal wrote: post #56

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting. Oil is $75, about average over the last decade. It has almost nothing to do with employment, wage growth or GDP except inasmuch as all major economic measures affect eachother. A year ago oil prices were low, did that mean the opposite of this article (whatever that is) was true? This kind of…

> Are "labour market running hot" or "central bank tightening" references to actual things Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. “Central bank tightening” refers to…

>Yes. Unemployment is very low. Actually it is not that low, especially out of the tech sector.

Real unemployment and under-employment are high because of the way unemployment is now measured. The definition of being unemployed has changed since the GFC to manipulate the statistics.

Some tricks to manipulate the numbers are:

- If you have been unemployed for more than 6 months you are no longer classified as unemployed.

- Work for one hour a month, say mow your neighbor's lawn or give someone a paid ride in your car and you are no longer unemployed.

- Give up an stop looking for work, and you're no longer unemployed.

Re: The rich world needs higher real wage growth

#168

Post by jjoonathan »

CPAhem wrote: post #167
JumpCrisscross wrote: post #61

Earlier quoted context omitted.

> Are "labour market running hot" or "central bank tightening" references to actual things Yes. Unemployment is very low. That means if you need ten people, you may have to pay more or wait longer than you expected. That is what “labour market running hot” refers to. “Eliminating slack” means encouraging employers to raise wages (which can cause inflation) to fill productive jobs. “Central bank tightening” refers to…

>Yes. Unemployment is very low. Actually it is not that low, especially out of the tech sector. Real unemployment and under-employment are high because of the way unemployment is now measured. The definition of being unemployed has changed since the GFC to manipulate the statistics. Some tricks to manipulate the numbers are: - If you have been unemployed for more than 6 months you are no longer classified as unemploy…

If you're going to accuse someone of manipulating unemployment indices, please specify which index you mean, e.g. U3, U4, U5, or U6.

Looking at different indices at different times is obviously going to skew the results, but that's the fault of the person doing the looking, not the BLS, Obama, or the Deep State.

Re: The rich world needs higher real wage growth

#169

Post by djajshgsjja »

ben_w wrote: post #43
mozumder wrote: post #29

Earlier quoted context omitted.

Mass transit eliminates the energy problem. Two far away cities connected to each other via high-speed rail might as well be next-door-neighbors.

Sure, between two cities. Not so useful for rural-to-city commuting.

I think we can all agree that if the costs of high-speed transit were low enough to support hubs in every city city with spokes going to all nearby suburbs, all sorts of problems would be solved.
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