Bloomberg: 'Alarmingly Big' U.S. Wages Gain Undermines Argument That Inflation Is Transitory

[Yo_Mama_Been_Loggin]

(Bloomberg) -- While the U.S. government’s first estimate of third-quarter growth garnered plenty of attention this week, there was another economic data point that raised quite a few eyebrows.

The third-quarter employment cost index report showed civilian wages leapt 1.5%, the largest advance in series data back to 2001, as companies across a swath of sectors resorted to higher pay against a backdrop of labor shortages.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, called it “alarmingly big.” Still, it’s easy to see more tempered wage growth in the months ahead as Americans return to the workforce and employers find success filling a near-record number of vacancies.

“If that doesn’t happen, and wage growth continues to run at this pace, then Game Over” for the transitory-inflation argument, he said in a note.

https://www.msn.com/en-us/money/markets/alarmingly-big-us-wages-gain-undermines-argument-that-inflation-is-transitory/ar-AAQ7Xzf

Oh nos workers are getting a long overdue wage increase of only 1.5% and the punditocracy is soiling itself.

[WarGamer]

1. I've never seen inflation like this.

Simple things like McDonalds.

A quarter pounder with cheese meal with a med diet coke is $10+

Just 5 years ago it was maybe $7

At the grocery store, 3-4 bags is $100+

[Lochloosa]

2. 71 -78. Nixon inacted wage and price controls trying to slow it down.

[ret5hd]

4. Think how cheap we could get our BigMac on...

if we slapped some sense into those demanding a decent wage.

Heaven on earth, I tell ya.

[Mary in S. Carolina]

6. That is not inflation

That is McDonald corporate increasing prices to .... punish us. Avoid fast foods and go to your local deli, etc. Fast food is bad for you and bad for the US economy - buy from locals.

[ret5hd]

11. Every dollar is a vote for "the world you want".

Is it Walmart and Amazon? McDonald’s and Olive Garden? 7-11?

Your local deli. That nameless taqueria down the street. Even (gasp!) your own kitchen.

[Mary in S. Carolina]

20. Great Post ret5hd

[Alexander Of Assyria]

9. Stores selling bags for 25 dollars is pricey.

[DBoon]

3. Why is workers being paid more always a catastrophy?

They are just catching up to 40 years of wage stagnation on inequality.

[Sherman A1]

10. Precisely

Workers have been getting screwed for decades as you point out. The money has been taken in by the corporations but has flowed only to the top dogs, while the people that actually make the profits get shafted.

[Mary in S. Carolina]

21. Exactly

[edhopper]

5. Why do I think some of the increase

is just profiteering by companies?

[Mary in S. Carolina]

7. Yup

[ret5hd]

12. Exactly.

[Withywindle]

17. Because it is

And pointing fingers at workers standing up for living wage, saying "Look! They're the reason your Big Mac prices went up! Greedy people who work for us want enough money to pay rent and live, look at those parasites working three jobs for $10 an hour!"

It's not the workers' fault. But blaming them is corporate PR

[unblock]

13. So many temporary factors here

I'm not ruling out that a small portion of this inflation might be structural, but several factors are clearly temporary.

The economy is growing at a rip-roaring pace as things are getting back to normal as Covid is becoming less of a threat. Temporary, we're already growing far slower than we did in the first two quarters of the year.

Millions retired early, which means employees are in greater demand and can actually get a raise maybe at long last. Temporary, retirements will be lower in the coming years because, well, millions who would have retired in those years already retired.

Then there's pent-up demand from Covid. Temporary.

Port issues. Temporary.

And yeah, big government deficits. Temporary.

[Withywindle]

18. Also the fact that a lot of workers DIED

The #1 profession that took the hardest hit in terms of Covid deaths is restaurant line cooks

https://www.cnbc.com/2021/02/02/jobs-where-workers-have-the-highest-risk-of-dying-from-covid-study.html

"Overall, the researchers found a 22% increase in mortality during the pandemic. But “what we’re so surprised to see is just how much that risk varied across sectors and even across specific jobs,” Riley tells CNBC Make It.

Line cooks had a 60% increase in mortality associated with the pandemic.

The top five occupations that had higher than a 50% mortality rate increase during the pandemic include cooks, line workers in warehouses, agricultural workers, bakers and construction laborers."

Will other people be hired for these jobs? yes, if employers are willing to pay better. But a whole lot of workers are permanently missing from the work force because they're just physically gone and are not coming back from the grave.

[unblock]

22. Sad but true.

[ExciteBike66]

14. If wages rise with inflation, then the only effect is that our fixed debts become easier to pay...

[Deminpenn]

15. Capitalism at work!

Supply and demand. Labor is in the driver's seat right now with increased consumer demand and a shortage of workers. Labor can demand and is getting increased wages and benefits. Business had it good for a loooong time with a frayed social safety net forcing many employees to work well into their 60s and beyond, to accept low wages and skimpy benefits or both.

Apparently capitalists only like the free market system when it works to their advantage.

[malletgirl02]

19. Good point

Also I bet Bloomberg never complained about CEO making large salaries causing inflation.

[ProfessorGAC]

16. Article Is Nonsense

First, inflation is ill described as transitory. It's either always transitory, as it ebbs & flows, or never transitory as it is a constant, at different rates of change.
Second, the inflation data is still compared to an artificially low baseline caused by nearly 20% of the economy shutting down a year ago. The disruption in demand caused a price dip in many sectors, so the current prices are an extension of the line from 2017-2019, but with an unanticipated dip in 2020. So, the numbers aren't as scary as advertised.
Third, wage increases are always the first target of inflation hawks. This misses the obvious benefit of people having more discretionary income, thereby increasing demand, reducing the volume of new lending, and the well-understood productivity gains from better compensation.
Shephardson is an alarmist and without 2 or more years of such economic behavior is making predictions without merit.
Since all those things I listed have the potential to lower margins & profit for companies, people like him conflate corporate profitability with macroeconomic health.

[DemocraticPatriot]

23. Oh yes, when workers wages grow, it is "alarming"!

After all those years of no growth... the plutocrats are in a panic.