As Inflation Rises, It’s Even Harder to Get a Raise

[FUCK THE POLICE]

https://mobile.nytimes.com/2018/07/0...ion-wages.html

As Inflation Rises, It’s Even Harder to Get a Raise
By Peter Eavis


The economy is not yet there for many Americans.

The jobs report on Friday showed that the United States added an impressive 213,000 jobs in June. The recovery has brought unemployment down to historically low levels.

But the report, as is often the case, pointed to a crucial way in which the economy is still not firing on all cylinders: The strong demand for labor has not prompted employers to substantially increase how much they pay their employees.

Hourly earnings in June grew 2.7 percent from a year earlier. That’s more or less in line with the pace of the past two years. But now those modest wage gains are worth less in the real world. The reason: The prices of goods and services are picking up. In May, inflation hit 2.8 percent and grew faster than wages, which increased 2.75 percent. Inflation numbers for June come out on Thursday.

Underwhelming wage growth has been a characteristic of the economy since the financial crisis of 2008. But if inflation continues to erode wage gains, consumers can afford less, dragging the growth of the overall economy. The Trump administration might then find it harder to promote its economic achievements. At the end of 2016, the last full month of the Obama administration, wages grew at an annual rate of 0.6 percent, adjusted for inflation. In May, inflation-adjusted earnings fell 0.05 percent.

The White House has contended that corporate tax cuts, like those enacted last year, will prompt companies to make investments that improve productivity and thus enable them to pay employees more. (Productivity measures output per worker.)

So far, that virtuous cycle does not seem to be taking hold. And some economists are skeptical that it will. Companies have had the ability to invest cheap capital for years, and wages have not risen strongly.

“A lower cost of capital may lead to more investment that may lead to more productivity growth, but to assume that will trickle down to middle-class wages flies in the face of everything we’ve seen for the last 20 years,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and an official in the first Obama administration.

The recently introduced personal tax cuts, of course, will bolster take-home wages. It’s hard to assess how much impact they’ve had, because Friday’s employment report does not factor personal taxes into its earnings figures. But Mark Zandi, chief economist at Moody’s Analytics, said the effective personal tax rate had not changed much in the past year, edging down to 12.21 percent in May, from 12.25 percent a year earlier.

“The tax cuts have yet to have a significant impact on individual tax bills, at least across all individuals and all sources of income,” Mr. Zandi said in an email. He noted that inflation-adjusted wages had in recent years grown more or less in line with productivity, which has itself been lackluster.

But wages could soon outpace productivity, Mr. Zandi predicted, because companies will have to pay higher wages to attract and retain workers. He sees signs of this already happening in numbers that track the wages of people who’ve been newly hired. The wages of new entrants rose 5 percent from the earnings of those hired a year ago, according to data from ADP, the human resources company.

“This is a sharp acceleration over the past year, and likely presages a broader acceleration in wage growth,” Mr. Zandi said, “as businesses will have no choice but to raise wages more quickly for their existing workers to maintain parity with new entrants.”

[FUCK THE POLICE]

This is what I warned about when those debt-financed tax cuts were passed. The economic boom should have been seen as an opportunity to pay down the debt, the fire did not need more stoking. By acting procyclically, you're just increasing inflation and reducing our capability to fight the next recession. The tax cuts will almost certainly result in long term lower economic growth than otherwise would have been possible.

[Jack]

'We need more tax cuts for the Rich and we need to import more Third World Labor to put real Americans out of work'.

I think that's a quote from Legina, maybe Herbbilly, could have been J. Croft (I get those guys confused).

[Cancel 2018.1]

I can honestly say I've never had a problem getting a raise. Especially first thing in the morning.

[Jack]

[anatta]

wages could soon outpace productivity, Mr. Zandi predicted, because companies will have to pay higher wages to attract and retain workers. He sees signs of this already happening in numbers that track the wages of people who’ve been newly hired. The wages of new entrants rose 5 percent from the earnings of those hired a year ago, according to data from ADP, the human resources company.

“This is a sharp acceleration over the past year, and likely presages a broader acceleration in wage growth,” Mr. Zandi said, “as businesses will have no choice but to raise wages more quickly for their existing workers to maintain parity with new entrants.”

wages are always stubborn. What did it for me (after 11 years with no raise) was a competing call center.
They had to pay us more to keep skilled operators from leaving for the competition.

Productivity has to max out, and then competition for skilled workers by low unemployment finally drives up wages.

[archives]

This is what I warned about when those debt-financed tax cuts were passed. The economic boom should have been seen as an opportunity to pay down the debt, the fire did not need more stoking. By acting procyclically, you're just increasing inflation and reducing our capability to fight the next recession. The tax cuts will almost certainly result in long term lower economic growth than otherwise would have been possible.

Always felt Trump's ultimate goal is inflation, his business is based on real estate, and he knows all those mortgages and loans are worth less with too much money in circulation

[Irish Exit]

Wages might very well be relatively stagnant for a large percentage of wage earners simply because the cost of employing them have risen so drastically just with Obamacare alone, let alone in states that are hiking their minimum wages.

[FUCK THE POLICE]

Wages might very well be relatively stagnant for a large percentage of wage earners simply because the cost of employing them have risen so drastically just with Obamacare alone, let alone in states that are hiking their minimum wages.

So you're claiming that overall compensation is still going up? Unlikely, I'll try to check your theory though.

[FUCK THE POLICE]

Looking at total compensation doesn't change the picture much actually:

https://www.epi.org/blog/professor-h...n-is-not-true/

There is no apparent massive increase in compensation due to Obamacare mandates.

Also minimum wage increases would increase wages, so suggesting that as a reason for stagnant wages seems to be extremely silly. Anyway the federal minimum wage has been largely stagnant... I'm not sure how to factor in the state increases in minimum wages into this though.

[cawacko]

Always felt Trump's ultimate goal is inflation, his business is based on real estate, and he knows all those mortgages and loans are worth less with too much money in circulation

Isn't inflation the Fed's goal? You can't think we were going to keep interests at zero forever did you?

[Flash]

This is what I warned about when those debt-financed tax cuts were passed. The economic boom should have been seen as an opportunity to pay down the debt, the fire did not need more stoking. By acting procyclically, you're just increasing inflation and reducing our capability to fight the next recession. The tax cuts will almost certainly result in long term lower economic growth than otherwise would have been possible.

I agree about keeping the debt down. The tax cuts should have been accompanied by matching spending cuts. Paying down the debt is not possible until we first eliminate the deficit. That will not happen so the debt is never paid down--when current debt comes due we just roll it over through additional borrowing.

[FUCK THE POLICE]

Isn't inflation the Fed's goal? You can't think we were going to keep interests at zero forever did you?

So during the Obama administration it was non-stop hyperinflation fearmongering, but now that Trump is actually causing real inflation no worries?

[cawacko]

So during the Obama administration it was non-stop hyperinflation fearmongering, but now that Trump is actually causing real inflation no worries?

Are you trying to discuss inflation or are you trying to start a partisan pissing contest? Based on your response to my question clearly it is the latter for you because you won't answer it.

[PostmodernProphet]

sounds like WM's boss turned him down again......