Felix Salmon:
To put this in terms even a politician can understand, the average weekly paycheck is now $787.19. That’s $59.78, or 8.2%, higher than it was at this point four years ago — and the rate of increase in wages is not slowing down. If you have a job at the next election day, you’ll likely be earning between 8% and 10% more than you were when Barack Obama was elected. This country has many problems, unemployment first and foremost among them, but stagnant wages and employees being underpaid are pretty low down the list, if they’re on it at all.This surprises me, although I guess it would be true in nominal dollars. In real dollars, I would suspect that wages are just about the same, or even lower in purchasing power. The other question I would have would be if this figures in benefits? Some of the calculations of employee pay figure in benefits, and health insurance costs going up get reflected as wage increases for workers. I'm pretty sure that doesn't make workers feel better off.
I do think that productivity gains should go more to labor and less to capital, but in the first instance that should take the form of increased hiring, rather than wage increases for the already-employed. Those of us with jobs are the fortunate ones — and yes, if we’re paid more, we’ll spend more, and that in turn is likely to show up in higher prices. The Fed is probably right to be worried about wage inflation. But that just means that it should look for ways to divert that money into new hiring, rather than raising rates to choke it off altogether.
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