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Opinion
Noah Smith

Of Course Executives Play Down the Possibility of Raises

It's a negotiating tactic, not a forecast.

Assume that everything executives say is a self-serving tactic.

Assume that everything executives say is a self-serving tactic.

Source: Caiaimage, via Getty Images

Corporate executives speaking at a Fed event recently ruled out broad pay raises for workers. Maybe that’s a hint that companies do not intend to pass along the savings from Republicans’ corporate tax cut, as many promised to doMaybe it’s evidence of automation holding down wage growth. Or maybe it just means that talk is cheap.

Americans shouldn’t take what corporate executives say at face value, for a number of reasons. First of all, there are a lot of companies in the U.S., and at any given time, some of them are doing one thing, and some of them are doing the opposite. Ford may be slashing wages even as Caterpillar raises them, or vice versa. In fact, when we look at actual wage changes for the median worker, they don’t show much variation. Raises are chugging along at around 3 percent per year: