Happy New Year, Sure, But Why Aren't Wages Soaring? Frank Stricker
The official unemployment rate is 4.1%. That's full employment for mainstream economists. We'd expect to see wages on a long upward path, as employers compete for new hires. But average pay rises one month and falls the next. You may read that it increased 2%+ in the last twelve months, but after inflation is accounted for, much of the increase disappears. Higher minimum wage laws have helped in some places, but for the nation as a whole wages are not on the up-escalator.
President Trump tells us he is fixing everything. But from the inauguration through November, the average real hourly wage of a rank-and-file employee increased half a percent. If she was earning $20.00 an hour in January; she's earning $20.10 today. And the long-term trend is truly depressing. Real pay today is about where it was in 1972-1973. The U.S. added tons of new income and wealth, but not much filtered down.
To get insight into the wage problem and its causes, I sent our intrepid Untrained Economist (UE) to talk to Republican House Member and Freedom Caucus leader, Jordan Rabid.
Untrained Economist (UE): "Are you Republicans going to reward your working-class supporters by raising the federal minimum wage? It's just $7.25 and lifting it to $15 would help 40 million workers."
Rep. Rabid: "Higher minimum wages are a job-killer. You should know that."
UE: "Many studies show that lifting the minimum wage doesn't kill jobs or only a few, and that it cures a lot of poverty. It creates jobs too, because people buy more things and services."
Rep. Rabid: "We believe people should work harder, be more disciplined, go to church, stay married. That's what our President stands for."
UE: "I guess you don't want to encourage unionization, which raises pay and benefits?"
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