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Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both)

Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both). This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be. And make no mistake, a combination of low inflation and low growth is already something very near to a recession. The Fed and other central banks are worryingly close to dropping the ball now, as they did in late 2008. Luckily though the circumstances are not nearly as bad now as they were back then - there's a fair chance that we'll muddle through.

jlarocco 8y ago
> Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both). That's generally true, but it's not an absolute, and it doesn't rule out paying higher wages while also maintaining the current level of employment. It's pretty clear from the data [1] that corporations are earning more than ever and not passing it on to employees. > This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be. That's true, but doesn't apply. Real wages aren't even keeping up with inflation, and are decreasing relative to productivity [2], so it's silly to claim they're so high they're causing unemployment. [1] https://fredblog.stlouisfed.org/2018/08/corporate-profits-versus-labor-income/ https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve... [2] https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/
FranzFerdiNaN 8y ago
amazing how you put the blame on workers for unemployment instead of on corporations being greedy vampires sucking the life out of everything in the pursuit of ever more shareholder value.
- zozbot123 8y ago
  I don't blame workers for unemployment. If anything, corporations are to blame for not being willing to hire workers at lower real wages, or perhaps with worse working conditions (e.g. increased monitoring and micromanagement) when involuntary unemployment is high. (To be clear, this happens for entirely self-serving reasons, like the concern that hiring someone at lower pay would ruin "morale" within the firm. No one sane thinks that hiring unemployed workers is bad for them, and worse than the alternative of leaving them without work!)

jlarocco 8y ago

> Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both). That's generally true, but it's not an absolute, and it doesn't rule out paying higher wages while also maintaining the current level of employment. It's pretty clear from the data [1] that corporations are earning more than ever and not passing it on to employees. > This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be. That's true, but doesn't apply. Real wages aren't even keeping up with inflation, and are decreasing relative to productivity [2], so it's silly to claim they're so high they're causing unemployment. [1] https://fredblog.stlouisfed.org/2018/08/corporate-profits-versus-labor-income/ https://fredblog.stlouisfed.org/2018/08/corporate-profits-ve... [2] https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/

FranzFerdiNaN 8y ago

amazing how you put the blame on workers for unemployment instead of on corporations being greedy vampires sucking the life out of everything in the pursuit of ever more shareholder value.

zozbot123 8y ago
I don't blame workers for unemployment. If anything, corporations are to blame for not being willing to hire workers at lower real wages, or perhaps with worse working conditions (e.g. increased monitoring and micromanagement) when involuntary unemployment is high. (To be clear, this happens for entirely self-serving reasons, like the concern that hiring someone at lower pay would ruin "morale" within the firm. No one sane thinks that hiring unemployed workers is bad for them, and worse than the alternative of leaving them without work!)