Yellen Is Right: Workers Need a Raise
Federal Reserve Chair Janet Yellen -- most recently in today's Congressional testimony -- has signaled that she'd like to see U.S. workers getting paid more, and that she's not terribly concerned about inflation getting out of control if they do.
Judging from how workers typically fare in recoveries, Yellen is right: They're long overdue for a raise.
Productivity data from the Bureau of Labor Statistics suggest that workers have gotten an unusually raw deal so far in this recovery. Their hourly compensation, adjusted for inflation, has risen only 0.1 percent from June 2009 thought March 2014, despite output per hour having increased 6.5 percent. In the five previous recoveries of comparable length, workers' real wages increased by about half as much as their productivity.
In other words, pretty much all the benefits of workers' increased productivity have so far gone to corporate profits, not to them. To restore the traditional balance, compensation would have to rise at a faster rate than overall inflation. If it doesn't, U.S. policy makers might have a different problem on their hands: a balance of power that has shifted in favor of the owners of corporations, to the detriment of those who make their living by selling their labor.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Putin Won at the Ballot Box. He's Losing Elsewhere.
- There's a Blamer-in-Chief in the Oval Office
- Cambridge Analytica Behaved Appallingly. Don't Overreact.
- McCabe's Firing Wasn't Political. Until Trump Made It Political.
- Warren Buffett Is Just an Average Employee
- The Population Bomb Has Been Defused
- "Huge" Trade Deficits Are Smaller Than You Think