Tuesday, August 1, 2017

Real wages in developed countries have been under pressure

Wages have been either stagnant or declining in the U.S. and other developed economies for more than a decade once inflation is taken into account. Yet, the Federal Reserve and other major central banks remain convinced labor markets are tight, and that a surge in employee costs and inflation are just around the corner. Hence, their recent shift toward credit restraint.

But inexplicably, policy makers are failing to take into account the many significant economic changes in recent decades that are holding down wage growth.