Inflation hits six year high, erasing wage gains by average workers

[Bojack Horseman]

http://www.chicagotribune.com/business/ct-biz-inflation-rates-20180713-story.html

[PSOL]

I really wish Janet Yellen was still here, how she stewarded good times.

[#gravelgang #lessiglad]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

[KingSweden]

I really wish Janet Yellen was still here, how she stewarded good times.

Powell is not significantly different from Yellen. The Fed pick could have been *much* worse

[Zaybay]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

This is an excellent analysis. Inflation has been low for most of the 21st century, the real question is why is wage growth so low. And I think you touch on why as well. Awesome post!

[PSOL]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

This is an excellent analysis. Inflation has been low for most of the 21st century, the real question is why is wage growth so low. And I think you touch on why as well. Awesome post!

I would say that companies are blocking wage growth, mainly due to little yet innefectual unions and lack of worker right. With not as much disposable income as expected the consumer can’t support these new firms. Or we could blame the end of net neutrality, stifling investment by making startups online riskier to invest in.

[136or142]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this. 

[136or142]

From the article, the tariffs have had a lot to do with the rise in inflation.  Not much that the Federal Reserve should do about that at this point.  Hopefully the tariffs won't cause a persistent rise in prices (which is actually the technical definition of 'inflation') but once they've worked through the economy, they won't cause ongoing price increases.

If it's just a one time increase in prices, the Federal Reserve would be wise to not act.

[#gravelgang #lessiglad]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

[KingSweden]

From the article, the tariffs have had a lot to do with the rise in inflation.  Not much that the Federal Reserve should do about that at this point.  Hopefully the tariffs won't cause a persistent rise in prices (which is actually the technical definition of 'inflation') but once they've worked through the economy, they won't cause ongoing price increases.

If it's just a one time increase in prices, the Federal Reserve would be wise to not act.

Thankfully Powell isn’t a moron and knows this

[136or142]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

I gather the 'non-compete' agreements when a person leaves an employer are also a surprisingly large factor as well, as they prevent a person from using their position to bid for a higher paying job.  I believe the lack of smaller firms in different states where these 'non-compete' agreements wouldn't take effect are the problem.

In addition to anti-trust, I think these 'non-compete' agreements need much more thorough scrutiny as they are essentially a form of restraint of trade, as well as completely tilting the negotiating field to the employer.

[Person Man]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

It is just part of the culture of corruption.

[Antonio the Sixth]

but muh great economy

[DC Al Fine]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

I gather the 'non-compete' agreements when a person leaves an employer are also a surprisingly large factor as well, as they prevent a person from using their position to bid for a higher paying job.  I believe the lack of smaller firms in different states where these 'non-compete' agreements wouldn't take effect are the problem.

In addition to anti-trust, I think these 'non-compete' agreements need much more thorough scrutiny as they are essentially a form of restraint of trade, as well as completely tilting the negotiating field to the employer.

Non-compete are non-enforceable outside of a very large muted set of circumstances.

[💥💥 brandon bro (he/him/his)]

Non-compete are non-enforceable outside of a very large muted set of circumstances.

Do you have some extra reading on this? I know legality varies by location but I was under the impression these were much more common than you claim. In any event, aren't many employees forced to sign non-competes as part of their contract whether or not they are enforceable? This is something I imagine the average worker wouldn't have the knowledge to know is unenforceable.

Here is a paper looking at intra-firm "no poaching" agreements, e.g., if you work at one McDonalds, corporate policy dictates other McDonalds can't try to poach you. I haven't read it but it was discussed in a recent Vox podcast.

[pbrower2a]

The tariffs already have an effect.

[Hammy]

but muh great economy

[136or142]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

I gather the 'non-compete' agreements when a person leaves an employer are also a surprisingly large factor as well, as they prevent a person from using their position to bid for a higher paying job.  I believe the lack of smaller firms in different states where these 'non-compete' agreements wouldn't take effect are the problem.

In addition to anti-trust, I think these 'non-compete' agreements need much more thorough scrutiny as they are essentially a form of restraint of trade, as well as completely tilting the negotiating field to the employer.

Non-compete are non-enforceable outside of a very large muted set of circumstances.

I'm familiar this is the case in Canada, I'm not certain it's the case in the United States.  Outside of that, as was written, I'm not certain that people in the U.S who sign these non-compete agreements are aware they aren't enforceable, and even if they aren't enforceable legally, the main problem is having the previous employer bring down the very high priced lawyers in to the situation.   So, they may not be enforceable legally, but, in most cases, they are likely completely enforceable as a practical matter.

[Tintrlvr]

Powell has largely hued to Yellen's benchmark rate raising schedule, so I struggle to think of how she would have improved this situation.

The real central question to this article is buried halfway in and receives little coverage. Why are wages more or less stagnant when unemployment is hovering around 4%? Inflationary concerns would be more muted were wage gains outpacing inflationary pressure, but as it stands, that isn't presently the case. Possible that it's due to fewer entrepreneurial businesses being created as opposed to historical averages? Possible that it's due to decline in union membership? Possible also that productivity growth has lagged compared to past recoveries?

And really, from a policymaking perspective, we should be more interested in which sectors are experiencing wage growth in excess of inflation.

The newest argument to explain this is that monopsony is a much bigger factor than anybody previously realized.  The Brookings Institute has done some interesting research into this.  

This is a great point and the Brookings brief was excellent. To my understanding, the fundamental gist is that, because of monopsonic power, we're seeing fewer new entrants to the markets and, because those firms had historically been wage growth drivers, we're presently seeing stagnant wages. The policy prescription to this, I would think, is to decrease regulatory capture that's made it more challenging for newer businesses to compete against the established entities.

Edit:I would also add to this that the severe decline in robust antitrust enforcement also impacts the barriers to entry for new firms and causes the new firms that DO spring up to be purchased by the larger firms, snuffing out the potential for competition and, thus, wage growth

I gather the 'non-compete' agreements when a person leaves an employer are also a surprisingly large factor as well, as they prevent a person from using their position to bid for a higher paying job.  I believe the lack of smaller firms in different states where these 'non-compete' agreements wouldn't take effect are the problem.

In addition to anti-trust, I think these 'non-compete' agreements need much more thorough scrutiny as they are essentially a form of restraint of trade, as well as completely tilting the negotiating field to the employer.

Non-compete are non-enforceable outside of a very large muted set of circumstances.

I'm familiar this is the case in Canada, I'm not certain it's the case in the United States.  Outside of that, as was written, I'm not certain that people in the U.S who sign these non-compete agreements are aware they aren't enforceable, and even if they aren't enforceable legally, the main problem is having the previous employer bring down the very high priced lawyers in to the situation.   So, they may not be enforceable legally, but, in most cases, they are likely completely enforceable as a practical matter.

Depends which state. California views non-compete agreements as per se unenforceable, but California is fairly out of step with the rest of the country on this point. Most states views such agreements as enforceable as long as they serve legitimate business interests/are reasonable or other similar squishy standards, which create enough room for interpretation to make them a strong threat even if a court would in theory throw them out.

[junior chįmp]

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Thats actually the invisible grifting hand of MAGA-nomics

[Jersey Jimmy]

but muh great economy