3 ms·
Inflation was not exceeding corporate profits. If it's good that wages raise slower than productivity - that means it's good that workers always get a smaller
by onlyrealcuzzo 4y ago
Inflation was not exceeding corporate profits.
If it's good that wages raise slower than productivity - that means it's good that workers always get a smaller share of the pie.
This, I do not think, is a universally agreed upon opinion.
- rossdavidh 4y agoTrue, but I think the target should be that wages rise at the same rate (over the medium term) as productivity. If wages rise higher for a year, it's not an issue. But inflation (including wages) has been rising for well over a year now. Now, it is also true that if wages rise slower than productivity, that should also concern the Fed, and they haven't been as concerned as they should have. However, given that they switched to a positive (2%) rate of inflation for their target a few years back, they are at least acknowledging the problem. But I agree that wages rising slower than productivity ought to be acted on as well.
- cudgy 4y agoThis assumes that current ratio of wages per unit of productivity is in balance. Many would argue that wages are too low for many jobs relative to productivity. The Fed consciously takes action to keep that poor ratio for workers the status quo ante.