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Tuesday, June 17, 2014

The Economy May Be improving, But Worker Pay Isn’t

This is a good follow-up to my column (linked in the post below this one):

The Economy May Be improving. Worker Pay Isn’t, by Neil Irwin, Washington Post: The latest economic data out Tuesday morning was generally good. Home building activity rebounded nicely in May after weak results in April. Consumer prices rose 0.4 percent in May, such that inflation over the last year is now 2.1 percent, about in line with what the Federal Reserve aims for.
But that inflation news carried with it a depressing side note. ... Average hourly earnings for private-sector American workers rose about 49 cents an hour over the last year... But that wasn’t enough to cover inflation over the year, so in “real” or inflation adjusted terms, hourly worker pay fell 0.1 percent over the last 12 months. Weekly pay shows the same story...
Pause for just a second to consider that. Five years after the economic recovery began, American workers have gone the last 12 months without any real increase in what they are paid. ...
There had been some hints here and there that worker pay was starting to rise in the last few months... But it wasn’t sustained. ...
The latest numbers should give pause to any Federal Reserve officials ... who see wage pressures as evidence that the economy is overheating..., the evidence points to more of what we’ve seen for most of the last six years: Employees have little negotiating power to demand higher pay.

    Posted by on Tuesday, June 17, 2014 at 09:03 AM in Economics, Inflation, Unemployment | Permalink  Comments (23)

          


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