For over a year, the Fed has barked at us that the labor market is "out of balance." There's more to the story. We do lack balance across the entire economy. It's time to get real about how to fix it.
Jan 3, 2023·edited Jan 3, 2023Liked by Claudia Sahm
Love it! From what I understand, real wage growth has been stagnant for decades. Wage growth would give workers the chance for the American dream now, versus putting some away each month and hoping that investments "might" pay for an easier, RV filled life later. I don't know how you restore wages and worker bargaining power and avoid the upward spiral of inflation that you have spoken of previously, except by mutually agreed upon trust between manufacturer and worker.
It’s surprising there’s been so little talk about how tax policy over the past 30 years has evolved to disincentivize work. When people can make a living from investing in Airbnbs or tiktoking or living the capital gains passive income dream, why bother with a job that actually produces stuff? If we’re serious about policy incentives to work and expanding labor supply, we need to equalize the tax gap between labor and capital income. Right now, you’re a fool to rely on labor income if you have the asset wealth to avoid it.
OMG Grrl! You write: "Why isn’t the Fed asking why we are living with a labor shortage? Why isn’t it asking about the benefits of wages with some bargaining power? Why isn’t it asking about the other imbalances causing this strange labor market? Why?"
Be careful your realistic (not macro-theoretical) questions may start to look Marxist. Actually you should delve further into this area. Bankers and most economists have no clue what cafeteria workers are experiencing. Task ONE in relieving a labor shortage is eliminating constraints on unionization and task TWO is fixing the immigration system. Neither involves the pain of an interest rate induced recession, but they do require a functioning federal government.
I do not know if I get the point: how can we sort the imbalance out if it is the aftermath of market-demand side; people are demanding durables goods and will switch to services one day, should the minimun wage be higher in service sector to get a balanced economy?
It seems rather odd to focus on wages which is downstream of demand for goods. As long as inflation is above target it is clear SOMETHING is out of balance most like gazillions of things (and not just or not necessary wages) and the Fed needs to get inflation back on target. The question is, are the current settings of its instruments adequate to achieve the target or not?
Love it! From what I understand, real wage growth has been stagnant for decades. Wage growth would give workers the chance for the American dream now, versus putting some away each month and hoping that investments "might" pay for an easier, RV filled life later. I don't know how you restore wages and worker bargaining power and avoid the upward spiral of inflation that you have spoken of previously, except by mutually agreed upon trust between manufacturer and worker.
It’s surprising there’s been so little talk about how tax policy over the past 30 years has evolved to disincentivize work. When people can make a living from investing in Airbnbs or tiktoking or living the capital gains passive income dream, why bother with a job that actually produces stuff? If we’re serious about policy incentives to work and expanding labor supply, we need to equalize the tax gap between labor and capital income. Right now, you’re a fool to rely on labor income if you have the asset wealth to avoid it.
OMG Grrl! You write: "Why isn’t the Fed asking why we are living with a labor shortage? Why isn’t it asking about the benefits of wages with some bargaining power? Why isn’t it asking about the other imbalances causing this strange labor market? Why?"
Be careful your realistic (not macro-theoretical) questions may start to look Marxist. Actually you should delve further into this area. Bankers and most economists have no clue what cafeteria workers are experiencing. Task ONE in relieving a labor shortage is eliminating constraints on unionization and task TWO is fixing the immigration system. Neither involves the pain of an interest rate induced recession, but they do require a functioning federal government.
You should get your Congressman to sponsor legislation that expands the FOMC to include workers from a broader array of sectors.
Claudia - How do we amplify your voice, more? Balance is sorely needed. But that message is not getting out / as loud.
I do not know if I get the point: how can we sort the imbalance out if it is the aftermath of market-demand side; people are demanding durables goods and will switch to services one day, should the minimun wage be higher in service sector to get a balanced economy?
It seems rather odd to focus on wages which is downstream of demand for goods. As long as inflation is above target it is clear SOMETHING is out of balance most like gazillions of things (and not just or not necessary wages) and the Fed needs to get inflation back on target. The question is, are the current settings of its instruments adequate to achieve the target or not?
In the "shift to durables" graph, the three lines are unlabelled. Could that be corrected?