Eschew economic analysis and go straight for the “conspiracy theory”

That´s basically what Robert Reich does in “Why wages won´t rise”:

Jobs are coming back, but pay isn’t. The median wage is still below where it was before the Great Recession. Last month, average pay actually fell.

What’s going on? It used to be that as unemployment dropped, employers had to pay more to attract or keep the workers they needed. That’s what happened when I was labor secretary in the late 1990s.

It still could happen – but the unemployment rate would have to sink far lower than it is today, probably below 4 percent.

Yet there’s reason to believe the link between falling unemployment and rising wages has been severed.

Low unemployment won’t lead to higher pay for most Americans because the key strategy of the nation’s large corporations and financial sector has been to prevent wages from rising.

And, if you hadn’t noticed, the big corporations and Wall Street are calling the shots.

Bob, the late 1990s is a different animal from 2014. In the late 1990s it was labor demand that was increasing on the heels of the positive productivity shocks. In 2014 it´s labor supply that´s increasing. While in the first more employment is associated with higher pay, in the latter, NO!

One thought on “Eschew economic analysis and go straight for the “conspiracy theory”

  1. So nearly 7 years after the great disinflation, we still have a stagnant wage problem, a low LFPR problem; and I think that strong dollar problem we’ve been hearing about recently came from somewhere… And so some inflation nutters have, or should have, some serious explaining to do about whether all the pain they put us through was worth it.

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