Wages

They’re going up. Total salaries and benefits moved up 4.4% in 2014, rising to 53.6% of GDP, still below historic averages, but a decided bounce off the lows recently seen (Chart 1).

One reason wage growth has held pretty steady over the past few years is that lower-wage jobs have been added at a faster pace than higher-wage jobs. But it looks like wages for these lower paying jobs are moving up more quickly than for higher paying jobs. Two different measures of wage growth show an accelerating trend (Chart 2).

Not coincidentally, we’re also seeing corporate profit margins flatten out, meaning it looks like a greater share of income is shifting to workers. This may have (negative) implications for equity markets, but it’s one of the reasons the US economy should bounce back from the anemic (0.2%) growth rate of the first quarter.

• 29 Jun, 2015

  Drama/Drachma

  Here we go again, as Ronald Reagan used to say. Asian equities off 2-3%, Europe down 3-4%, Treasuries rallying, gold up. ...

• 21 Sep, 2020

  Two (Percent) is a Sad Number

  Last month, the Federal Reserve unveiled its new monetary framework, following an intensive 18-month review. The ...

• 14 Apr, 2015

  Sine Aqua

  The Ancient Mariner violated Nature by killing an albatross for sport, thus condemning his boat and crew to the ...