Why There Is No Wage Growth In America
Over the past 2 years the Obama administration has been desperate to boost minimum wages, usually over tedious bickering with republicans and corporations who have resisted such an increase, with neither party realizing that such a measure would not do much to actually boost aggregate spending. Instead, what Obama should have been focusing on was to limit the maximum number of hours worked per week, because as the following chart shows, the reason why weekly pay is rising and aggregate earnings is not due to an increase in hourly wages but because Americans are simply working longer hours every week: not quality but quantity.
What this means is that we can start the countdown to the next executive order which will make it illegal for any full time worker to work over 40 hours. Of course, none of that will do much since corporations have long since figured out how to eradicate the quantity problem, and increasingly American workers limited to 29.5 hours or less so their employers can avoid spending ridiculous amount of money on Obamacare.
In fact, as we have shown, over the past half year, non-supervisory workers, those who are not bosses or in any leadership positions, have seen the growth in their hourly earnings tumble...
... even as those of their bosses - naturally - has soared!
Meanwhile, as we showed earlier this week in "Home What A Permabull Thinks Is The Biggest Threat To The Stock Market", the main reason behind America's depressed economy is that its workers, scrambling to achieve higher wages, and yet distracted by a countless number of iGizmos and numerous other reasons, have suffered an unprecedented collapse in productivity to never before seen levels.
And what all of the above goes back to, is one simple thing: an unprecedented amount of labor slack in the work force as can be seen by the following chart not of the unemployment rate, which can easily be manipulated and fudged by adjusting the number of Americans not in the labor force, but by the ratio of civilian employment to the total US population. This, clearly, is at depressionary levels.
Good luck with those rate hikes dear Janet Yellen...
The bottom line culprit: a record 92.9 million Americans not in the labor force. Until this primary problem plaguing the US economy is fixed, nothing else can be.
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I just think Corporations will sit on their cash. Corporations as a collective would be wise to give their employees a wage increase, but they are not collectives. You say the unemployment rate can be fudged and manipulated. Can all of your charts also be fudged and manipulated? For example, the paltry post crisis chart shows that productivity has been rising from a negative to a positve since 2009, but not to the pre-crisis level. However, before the dip in productivity in 2008-9, there had been a dip and flat line during 2005 up to the crisis. Doesn't this marker mean anything? During the period leading up to the crisis, the economy was overheating, inflation was increasing, productivity had dropped and flatlined and then the bubble bursts. Is it possible "The wrong recipe for wage growth" is actually the chart for "real adjustment". Examples of real adjustment are the costs of foods, petro, utilities, etc. being down compared to the pre-crisis levels in 2008-9. A paycheck in 2015 buys more than it did pre 2008-9. A new lease on a car, bedroom furniture, a couch, a lawn mower, etc., rather than food and shelter. I think McDonald's and Walmart get it. Both are instituting pay rises because their employees are also their customers and if you are a customer, why would you want to shop at your employer if they are treating you unfairly. If you look at anyone's 401K at crisis level and compare and see how it has grown and sustained growth over the past 6-1/2 years, you would be a hard fool to say that you have lost money. My bet is one's 401K's has probably come close to tripling since the crisis years. The 8 years leading up to the crisis, I can say I don't miss the false growth and facade of success that led to the bubble bursting. I wouldn't even use those years in any chart unless you footnote and explain the deception which let to the crisis. www.goldmansachs.com/.../isg-outlook-2015.pdf