“Where’s the Wage Pressure?”

March 2, 2015 5:00am by

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  1. DeltaV commented on Mar 2

    Old News: Below the 50th percentile, wages stagnant for 35 years. Above the 50th percentile, wages increasing with greater increases for higher earners.

    Ambiguous Results: An attempt to correlate wages and unemployment rates, but the correlations are so low that they don’t prove (or really even suggest) anything.

    Suggestion: They should try to correlate wages and employment rate. Also, look for correlation at various lags. This could be run in about 1 minute using a decent analysis tool like Matlab (or Python now if you want the same functionality for free).

    This is really excellent in one way: Assessing effects for various percentiles of income earners. The Fed has so far been controlling based on averages, which really harms the lower earners since the effects on the upper earners swamp everything else.

  2. DeltaV commented on Mar 2

    This analysis was not significant at these correlations. They should consider assessing the correlation of wages against employment rates instead of unemployment rates. Also, use various time lags. This could be done easily with Matlab, or a little less easily but completely free with Python.

    Very positive that they are running the analysis for various income percentiles. If only averages are used then the upper incomes completely swamp out all lower-income effects. So controlling policy based on averages tends to harm the middle and lower-classes.

  3. willid3 commented on Mar 2

    well not so sure that only the bottom 50% are this way. and that corporate America hasnt changed how this works to be more to their liking. it used to work. but that was before they managed sales to monthly, and to increase share price. then they managed it a 3 month window, course then they find the gold mine of share by backs. course then they started the incentives for executives to align them with share holders (sort of but not really). then it go to where they found that they could hire in the low cost countries, with (supposedly) no down side, then they started the annual layoff (in high cost countries). and of course this only impacts the 99% , not the 1%. now high cost countries are very subjective now days. course now they all seem to have sales problems, as for some reason they arent selling as much as they used (oddly enough biggest sales slow downs are in high cost countries. and the low cost countries sales arent growing like they were). so i one wonders whats their next fix for all of this?

  4. gman commented on Mar 2

    From and individual firms perspective why would you ever raise wages? If you can’t find a worker at a wage you like, simply move the position to the 3rd world. If that is not possible use technology to remove the skill from the job even further expanding the pool of desperate people who can fill it. If that can’t be done simple bring a worker from abroad to work here like Silicon Valley and Corp. Ag.

    Wages don’t go up because demand for labor at most percentiles of workers in the developed world is not there.

    “I just can’t figure out why wages don’t go up and there is no demand for end products”..

    • rd commented on Mar 2

      Almost everything Wal-Mart sells is made in China or some other overseas place. However, they have been unable to outsource their store clerks to China, so they have finally bit the bullet and given them a raise.

      The US has spent three decades outsourcing overseas anything that isn’t nailed down. Automation requires investment in new systems and training. Given the pressure on quarterly and annual earnings, there has been a lot of incentive to just cut more costs this year and let the future take care of itself.

      Finance is one of the last areas for this decade that I think is ripe to have a large swath of highly paid jobs replaced by machines. That has been ongoing with trading but is likely to continue spreading into other areas.

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