This Great Graphic was posted by Ed Conway. It shows real wage growth in the G7 countries, or indeed the lack thereof. Ed's point is that the UK experienced the largest decline in real wages of the group. Fair enough. Some will argue that it is precisely this decline in real wages that has allowed UK labor market to outperform.
Canada is at the other extreme. It appears to have the largest rise in real wages. Over the five-year period reviewed, it is the only country that did not see at least one year of declining wages.
France, which has what economists euphemistically call "labor market rigidities, has seen only one year decline and that was in 2008. Real wages in Italy have fallen in four of the five years and the pace accelerated in 2011 and 2012. German wages have risen in 2010-2012 period. The real wage increases are modest to be sure. More recent data shows that these past wage increases have not jeopardized the Bundesbank's price stability goals.
The modest wage growth in Germany helps facilitate the economic adjustment. Even if the German government was inclined to help more, which there is no sign it does, it is not clear how it could push up wages. Japan's Prime Minister Abe has advocated the same thing, but base wage growth in Japan remains meager. US President Obama also has embraced the benefits of higher US wages, like the other leaders, lack much direct influence.
Real wage growth in the US has been modest. It appears to be essentially flat over the five-year period reviewed here. To the extent that core inflation is driven by wage growth, the softness in real wage growth in the US is another factor that will help keep inflation, and therefore interest rates, low after long-term asset purchases stop.
Great Graphic: Real Wage Growth in G7 2008-2012
Reviewed by Marc Chandler
on
January 31, 2014
Rating:
Reviewed by Marc Chandler
on
January 31, 2014
Rating:
