The same thing could be going on nationally ------ little or
no wage inflation because employers refuse to offer more, and nonunion employees have no bargaining power to demand more.
Markets have over-reacted to
wage inflation because companies have not signaled higher input costs, says Dan Scott of Vontobel.
Not exact matches
Their unemployment rates go up even when the
inflation - adjusted value of minimum
wage declines,
because macroeconomics swamps all.
«We need to be persistent and patient and prudent,
because we're not there yet,» Draghi said, referring to the fact that EU
inflation and
wage growth have been disappointingly slow, despite the bloc's economic recovery since the financial crisis.
The
wage pop [last Friday's 2.9 % growth in hourly wages] spooked the markets
because investors, already skittish as valuations were a bit steep (though not as bad as people have been saying, given strong current and expected corporate earnings), envisioned this sequence:
wage growth gooses price growth (i.e.,
inflation), which raises both market and Federal Reserve interest rates, which slows growth and shaves corporate profit margins.
Because nominal
wage growth for a large fraction of workers has been held to zero, a somewhat higher rate of
inflation would grease the wheels of the labor market by allowing real wages to fall (Akerlof, Dickens, and Perry 1996).
Because nominal growth equals real growth plus
inflation, both nominal
wage and NGDP targets implicitly account for
inflation while also focusing on indicators more likely to promote the goal of full employment.
Average wages may not be keeping up with
inflation, but that is
because employers are creating millions of low
wage jobs in restaurants and the like.
But just
because you don't see
wage pass - through to prices doesn't mean that full - resource utilization, as proxied by low unemployment, won't drive up
inflation.
Ultimately, we see the dollar weakening against the euro as real rates in the Euro Zone become more positive and strengthen versus the yen
because inflation in Japan is picking up due to accelerating
wage growth.
One important reason why they have been able to be so patient is
because inflation and
wage growth has been very cool.
As for specifics, Jon Cunliffe explained that he voted against the BOE's recent decision to hike the Bank Rate
because of persistently weak domestic
inflation in the U.K. and poor
wage growth despite the weaker pound.