Between Jobs

By | 2017-07-17T12:21:18+00:00 June 6th, 2017|Global Market Update|

Are we working hard, or hardly working? Man shoveling at construction site. Photo: Igor Ovsyannykov. Source: Fancycrave Both. The unemployment rate declined to its lowest level since 2001. Employers added jobs for the 80th straight month – the longest such streak on record. Wages are up 2.5% from a year ago – more than the 2% wage gains we were seeing last year, and significantly more than the 1.5% inflation rate. But unemployment fell because people are leaving the workforce. The labor force shrank [...]

Follow the Money (Part 2)

By | 2017-07-17T12:21:54+00:00 July 6th, 2016|Global Market Update|

Where do our wages come from? Source: Wikipedia As long as there has been work, there have been wages. Wages have been part of society from Ancient until the present. There are many references to wages in the Bible. Wages can be calculated by the task—a piece rate—or by the amount of time put in. Day wages were typical in the ancient world, but as soon as clocks were invented, hourly wages became more common. Paying people by the hour has the virtue of [...]

Workforce Worries

By | 2017-07-17T12:22:23+00:00 October 26th, 2015|Global Market Update|

Where have all the workers gone? Photo: Doug Tengdin Ever since the late ‘90s the labor force participation rate has been falling. There are now over 92 million adult Americans who aren’t working and aren’t looking for work. On its face, that’s a shocking number—almost a third of the population. And 20 million of these folks are in their prime working years. Where did they all come from? And what are they doing? Source: St. Louis Fed Actually, it’s not that big a mystery. [...]

The Wages of Stagnation

By | 2017-07-17T12:22:42+00:00 July 15th, 2015|Global Market Update|

Why are wages growing so slowly? Source: Bureau of Labor Statistics A couple of researchers at the Cleveland Fed have been studying this question. Why, at a time when unemployment has fallen from 10% to 5.5%, has wage growth been stagnant? In real terms, wages haven’t risen at all over the past five years—in contrast to how wages rose after previous recessions. Cumulative change in compensation. Data for nonfarm business sector. Source: BLS and Cleveland Fed Part of the answer has been low productivity [...]

Employment, Wages, and the Fed

By | 2017-07-17T12:23:03+00:00 February 20th, 2015|Global Market Update|

Don’t put the cart before the horse! Source: Edublogs That’s what I thought when I heard that the Fed is targeting wages as an economic indicator. Over the past several years hourly earnings have been stagnant. Some say the Fed shouldn’t raise rates until household income improves. And since real wages haven’t moved, Fed policy should stay where it is. Only in the past couple years have wages begun to outpace inflation. […]

The Wages of an Oil Bust?

By | 2017-07-17T12:23:09+00:00 December 17th, 2014|Global Market Update|

Could falling oil prices delay the Fed’s rate hike? Source: Federal Reserve Among economists the current consensus is that the Fed will begin to raise interest rates sometime in mid-2015. There’s discussion about their official statement which explains that they expect to maintain the current rate regime for a “considerable time” following the end of their asset-purchase program, which ran out in October. A change in the statement would continue to prepare the markets for higher rates—something the Fed wants to do. Gone are [...]

Productively Growing

By | 2014-09-18T09:48:14+00:00 August 14th, 2014|Global Market Update|

Why does productivity matter? The textbooks tell us that rising productivity is essential to rising real wages. That is, as workers do more, they can be paid more. But why? Won’t employers just pocket the extra earnings? That’s what seems to be happening now. Rising productivity following the Great Recession has led to rising profits and stagnant wages, soaring stocks and a lagging labor economy. In the short run, yes, when firms can expand production using the same number of workers, they will, and [...]

Athletic Madness

By | 2017-07-17T12:34:20+00:00 March 31st, 2014|Global Market Update|

Are college athletes exploited? With the NCAA Basketball tournament reaching the heights of hype and football players from Northwestern University trying to unionize, it’s a reasonable question. After all, the schools make a lot of money off these sports—TV rights, merchandizing, ticket sales—not to mention the cachet that comes from being a national champion. In an era of branding and name-recognition, it pays to be number one. So the question is, should these athletes be paid—or paid more, since they do receive scholarships. First, [...]

Double Trouble?

By | 2013-12-02T11:25:39+00:00 December 2nd, 2013|Global Market Update|

Should we double the minimum wage? That’s what entrepreneur Ron Unz thinks. He proposes to increase the minimum wage in California $12 an hour. Some other folks want to increase it to $15 per hour. They claim that higher wages will lead to higher spending, and this will stimulate the economy. In addition, companies like Wal-Mart or McDonalds can afford it. Wal-Mart’s net profits were $17 billion last year; McDonalds made $5.5 billion. But those companies’ biggest expense is labor; if the minimum wage [...]