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by dh2022
1263 days ago
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"Allow a wage-price spiral of about 6% a year, " - Fed cannot create this wage-spiral. Fed only controls interest rates. From 2009-2016 interest rates were below 0.2% - and wages did not move. Only employers can create this type of wage spiral - and I do not think they will do this. Employers are now looking into automation as much as possible to replace labor (supermarket checkouts, at fast foods order kiosks, online ordering, robots for cleaning hotel rooms, etc...) |
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From 2009-2016 the unemployment rate fell from 10% to 4.7%, it is now at 3.5%
> Only employers can create this type of wage spiral
They don't create a wage spiral, they would naturally want to pay people less, they don't wake up one morning and give people raises without a reason.
And the reason is the jobs overhang. When you have twice as many jobs per job seeker then employers are FORCED to pay more just by supply and demand laws.
That only happens though when unemployment is near its lower bound (which we seem to have empirically determined is around 3.5% at least for our economy right now).