Not long ago employers wanted to hire many more workers than they could find, resulting in an unprecedented surge in unfilled vacancies. To get inflation under control, wage growth therefore had to come back down. Given weak productivity growth across the world, a 2% inflation target is probably achievable only if nominal wages grow by 3% a year or less. Central bankers hoped that by raising interest rates they would cause demand for labour to fall—ideally bringing down wage inflation without wrecking people’s livelihoods. The first part of the plan has worked. But despite falling labour demand, there is less evidence of the final part of the plan: lower wage inflation. Although American pay growth is down from more than 5.5% year on year to around 4.5%, that is probably still too high for the Federal Reserve’s 2% inflation target. And elsewhere there is little evidence of progress. In recent quarters wage growth across the rich world has hovered at around 5% year on year. “Very early indications for January show negotiated pay deals slowing only modestly,” reported analysts at JPMorgan Chase, a bank, last week. Euro-area pay is growing similarly fast. https://www.economist.com/finance-and-economics/2024/01/28/your-pay-is-still-going-up-too-fast
REPEAT WITH ME THE RATE OF INFLATION IS INCREASING BY 2 PERCENT
Not
Corporate profits are increasing faster.
Give me more money
The cost of labor is going to continue to increase rapidly as many developed countries have aging populations and not enough babies. Not to mention we are shifting from less low skilled and even white collar high paying jobs being available because of technology. More skills are needed that most countries aren't producing enough of. No matter how you slice the pie, we are living in probably the start of the largest downturn in human history. Where we have ever growing technology that is creating the worst possible outcomes, mostly due to greed. Also eff banks.
This is a bogus or incomplete report. Main sources of inflation are corporate profits and the Trump corporate tax cuts. Labor salary increases is a very wide term as not all labor are created equal and those increases are not catching up with increases in housing costs for example. If anything, fix your immigration system instead of going after my paycheck.
When companies have artificially held labor down for a very long time, it now is a contributing factor. But, you are correct it's not wages alone and yeah a lot of corporate greed but you may notice many layoffs. Party is over
Exactly. The wage price spiral effect is not "if wages go up, inflation happens and the cycle intensifies." The effect is "if all incomes rise together, costs based on those wages will increase" and start a spiral. This is also why raising the minimum wage doesn't cause commensurate inflation. A free and competitive market will reduce profit margins when faced with reduced demand due to increased prices. In other words, it doesn't all turn into inflation when some of the money comes out of the incomes of shareholders. As is shown in historical data, what falls when unions demand wage increases is corporate profits. It doesn't just all get passed on to the consumer directly.
It’s a lagging indicator. That 4.5% is compared to last year. Currently pay increases are flat or even lower.
And people still can't afford houses with these interest rates
These interest rates are the normal rates. 2% was the anomaly. People cannot afford houses they WANT is a large part of the issue.
It's almost like interest rates can be "normal," but houses can still be too expensive due to other economic and social factors.
Lol? Wtf??? My wage is very small compared to revenue my org generates for amazon. Actually labor cost of my org is 100x less than revenue we generate so no, we are not paid enough. Fuck off with this mindset that tech workers are overpaid. Slave mentality.
Then start your own company?
Why? Why doesn't every CEO/Cx start their own company vs getting millions in compensation from an existing company? Again, get out of here with this servitude/slave mindset. Demanding equitable wage should be a norm and encoruaged.
Given the rate of increase of corporate profits in most industries, we have a much better factor to explain inflation overall than salary increases in some industries.
Nominal wages are going down in Spain... Not even keeping up with inflation.
Spanish employers never wasted an opportunity for an internal deflation.
I'm curious if this data takes into account people taking reduced pay after being laid off.
Exactly how many people in the whole economy were laid off?
262k+ in 2023 according to layoffs.fyi.