This side of EPI’s Larry Mishel, you’d be hard pressed to find another economist who’s made more noise about wage stagnation in America than yours truly. So when I tell you I’m a bit–that’s just “a bit”–surprised to see such little acceleration in nominal wage growth even as slack has come down significantly, I hope you’ll read on–over at PostEverything.
Sources: BLS, Andrew Levin (a comprehensive measure of labor market slack derived by economist Andrew Levin).
Sorry, but your second graph and the explanation are incomprehensible to me. I’m not unsophisticated when it comes to statistics so perhaps you could break it down a little for me and other interested readers. I understand what the shape of the graph means, I don’t get the scale used, nor the explanation, long but unilluminating.
“The figure plots the coefficient from a Phillips wage curve rolling regression”
“The correlation measurement, called a correlation coefficient, will always take on a value between 1 and – 1:”
Just a Phillips wage curve coefficient. I called it a correlation in the text because more readers don’t do coeff’s, but I take your point re how that’s confusing if you know correlations go from -1 to 1. I just meant correlation as in y moves with x.
Obviously, I agree with this statement; “The U.S. business model has devolved to a point where raising pay is antithetical to sound practice. If you’re a successful employer, it’s the very last thing you do, and you do it only if you’re pushed to the wall by such a tight labor market that you’ll literally lose workers and, thus, profits if you don’t.”
Where does that leave us? With a substantially underpaid workforce because of globalization and a National Account deficit. The value of the Dollar is killing the working girl/man. Reversing the rise in the Dollar is essential to helping wage stagnation. It is all about demand, as any small business entrepreneur knows. Increased demand= increased wages/employment.
I don’t think the word “slack” should be accepted for this conversation. “Slack” is a metaphor that implies that we are somehow close to things being “straightened” or taut, and it diminishes the seriousness of what faces millions of people. It frames the discussion in the favor of those who really don’t care that much about high unemployment. It is time to put them on the defensive by pointing out that that they do not care much about inequality and have no desire to see wages increase. Everything they do is intended to make sure wages do not rise. Of course, they have no remotely plausible theory for how demand is going to recover fully, and since that is the critical missing element to the success of so many businesses in this country — they say so themselves– the people who do not want to see wages rise are at heart anti-business. It is time they were forced to defend themselves on these matters rather than always letting them off with kid gloves and letting them go on the offensive with absurd claims that we are coming close to a wage-price spiral and high inflation.
We have almost a 12% U-6. We had a 7% U-6 in 2000, the last time we had anything that from a workers viewpoint — the one that should really matter, by the way, since it is the one that affects demand — felt like full employment. Despite that much lower unemployment and underemployment rate, the upwards pressure on wages was modest. That 12% U-6 is higher than it was at anytime between January 1994 and December 2008. Along with the flat wages, the very high U-6 should be the end of the story.
No taking away buzz words unless you offer a replacement (the “no-net-word-taking rule”).
Slack is, as defined by the GOP, the number of slackers that should be working but aren’t. No metaphor involved.
To give Jared a buzz word back, would then be to reverse this and call it the amount of “fire” in the economy, that is, the number of people who have been fired. And, of course, everyone should want to put out the fire, which also sounds much more serious than slack, you have to agree.