• 148 days Could Crypto Overtake Traditional Investment?
  • 152 days Americans Still Quitting Jobs At Record Pace
  • 154 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 157 days Is The Dollar Too Strong?
  • 158 days Big Tech Disappoints Investors on Earnings Calls
  • 159 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 160 days China Is Quietly Trying To Distance Itself From Russia
  • 161 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 165 days Crypto Investors Won Big In 2021
  • 165 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 166 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 168 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 168 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 172 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 172 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 173 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 175 days Are NFTs About To Take Over Gaming?
  • 175 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 178 days What’s Causing Inflation In The United States?
  • 179 days Intel Joins Russian Exodus as Chip Shortage Digs In
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Is Anemic Wage Growth Stifling the Economy?

Bad theories never die.

For example, please recall the Phillips Curve economic theory states that decreased unemployment correlates with higher rates of inflation.

Unemployment has plunged, but wage growth and inflation (the latter as measured by the Fed) are nowhere in sight.

Instead of tossing absurd theories onto the ash heap, economists and writers repackage the same bad ideas in similar ways.

Here's the newly revised theory courtesy of the Wall Street Journal: Anemic Wage Growth Restraining Economy.

"Years of solid job gains are failing to produce a breakout in wages, suppressing the spark needed for a sustained pickup in economic growth," says Wall Street Journal writer Eric Morath.

Let's put that theory to a simple test.


Wage Growth Minus CPI Growth

Wage Growth minus CPI Growth

Wage growth in relation to price growth actually looks pretty good.

Wage growth is certainly far better now than the period between the mid-1980s and mid-1990s when the economy was generally booming.

Of course, this comparison is only valid if one believes the CPI, and most economists do.


Wage Growth and Recessions

Wage Growth versus GDP Growth

High wage growth in the 1970s and early 1980s produced four recessions in twelve years.

Sustained wage growth was a predecessor to the last seven recessions.

Yet here we are. Economists and writers are begging for higher wages and big increases in minimum wages.


Inflation Does Not Produce Growth

Please repeat after me "Inflation does not produce growth, nor is it desirable."

If inflation produced growth, Venezuela would be a glowing beacon of light instead of the cesspool of shortages we see today.

 

Back to homepage

Leave a comment

Leave a comment