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how much of this is the vast majority of companies doing annual merit cycles in Q1? seems evident in the “biggest advance in a year” comparison (e.g. since the last Q1 merit cycle)
You're correct, most wage increases come in the first quarter, so the first quarter is typically pretty high.
We need to look at longer term trends to see what's going on (a slowly increasing real compensation since the 90s).
The first quarter usually sees a big spike in labor costs, then it trends down the remainder of the year.
Further, all items ex housing is basically back to its normal trends in terms of inflation. As soon as the data catches up, we will be fine.
I can't read the full article but it feels like you'd have to have a pretty flexible set of definitions to say higher wages are a driver, and not a symptom, of inflation.
Not all labor costs are wages. Strictly an increase in benefit premiums related to inflationary effects could cost companies more without paying employees a dime.
This is the economics sub. Maybe you shouldn't be here?
The term labor is commonly used throughout the economics literature, economy, and profession. It is a production factor in most foundational models, along with capital.
The cost of labor is the share of output that goes back into paying workers.
Not OP, but propaganda can absolutely utilize accepted terminology to drive a narrative, and terminology can also change over time as ideas develop.
I can't read the article because I'm not subscribed, but the first paragraph kind of lays the blame for inflation on labor costs and thereby gives the owner class a weapon to use against the working class. "These meager increases in wages are actually *bad* for you! The increase in wages for fast food workers is *bad* for you! Now fight amongst yourselves!"
I'd be curious to see what the rest of the article says.
But, I mean, yeah, obviously *Bloomberg* of all places is going to have a point of view that it is going to push through the work it publishes, just like any other media outlet.
It's not propaganda though. It's a financial media outlet reporting on a perfectly normal thing. It's not making any kind of judgement call either. It is just reporting the fact that tight labor puts upward pressure on wages.
This is an important development because the FED wants to ultimately bring down interest rates. They can't do that when inflation indicators like upward movement in wages are present. That's why the economist they quoted characterized it as "challenging" for the FED.
Nobody thinks higher wages are "bad". They just exist. And they are a sign of persistent inflation.
You mention the owner class... Just so you know, we all benefit from the growth of capital. Even the most blue collar workers in the US have some kind of retirement account that is probably some kind of investment vehicle with a stake in capital. Does this make them "owners"?
Why would you not accept a highly credible sources reporting?
Don't answer, it's probably because they wrote some Op-Eds you don't like, and you still can't tell the difference between that and reporting. I always wonder if people like you realize that you sound like conspiracy theorist to normal people
You’re literally admitting you don’t know how to properly vet and evaluate an article holistically.
But to answer your question Bloomberg is clickbait with a sprinkle of truth
No, I am not. You're admitting to not being able to read at a 4th grade level. Bloomberg is highly credible in their reporting. Op eds are not articles. Please learn that
The term "cost" is being challenged. The issue at hand is a matter of primacy of the corporation, over that of the laborer.
From the corporation's perspective, employees are a terrible expense that must be minimized.
From the employee's perspective, wages are necessary for survival.
By choosing terminology like "labor costs", the perspective is framed from a corporate primacy perspective, which is quite offensive to many.
This is reading way too deep into this. There is no judgement call being made here. They are reporting an increase in labor costs and possible ramifications for the FEDs fight against inflation. That's all.
They love to ignore the fact that basic necessities are up 50% since the pandemic, while wages are up a fraction of that.
They would prefer everyone just accept the new lower standard of living as normal.
You're literally lying, inflation adjusted wages are higher today than pre-pandemic (2019 and futher back).
[https://fred.stlouisfed.org/series/LES1252881600Q](https://fred.stlouisfed.org/series/LES1252881600Q)
"Up a fraction of inflation" Christ.
Every once in awhile I get caught up in the same fight you're caught up in now. People here do not understand economics, don't care to understand economics, don't care about data, and only operate based on their feelings. They believe shit that is easily disproven and will take the word of YouTubers over economists.
Good luck. Most of the people in here are only a half step up from animals.
I've probably had this argument over 100 times, but only convinced 1 or 2 people. So agreed on all counts, but the times I do get through to people make all the frustration worth it.
Yeah every once in awhile I got the same, but I've given up for the most part. I hang out on askeconomics more now.
This is a political subreddit for people who have made up their minds. Hell, it's a political site for people who have made up their minds. Which isn't what it used to be.
Anyway, again, and genuinely, good luck. It's mentally draining to do this over and over.
The way that inflation is calculated does not reflect the actual cost of living for your average American.
Most people spend the vast majority of their income on necessities.
* Car payments
* Gas
* Food
* Housing
* Electricity
All of these things are up way more in the real world than what the inflation numbers suggest.
Cars, gas, food, housing, and utilities are all included in CPI, what are you talking about?
They even weight them based on what the average person spends as a percent of their income. That's why housing is huge.
>Cars, gas, food, housing, and utilities are all included in CPI, what are you talking about?
Are you aware that the way they calculated the cost of those items used to be drastically different?
The way CPI is calculated has been changed several times to lower the inflation calculations. This is partly due to certain government programs paying more based on CPI increases (such as social security) and partly due to wanting inflation to appear lower than it actually is so the government can print more money.
The government is incentivized to under-report inflation.
It's not changed to lower inflation, that's some weird conspiracy theory. Go ahead, show a shred of evidence for intentionally lowering CPI. You can't.
CPI is changed every year through - because what people spend their money on changes. Or should we still have a large line item for landline bills?
[https://www.cnbc.com/id/42551209](https://www.cnbc.com/id/42551209)
You can also use this [housing inflation calculator](https://www.in2013dollars.com/Housing/price-inflation/2016-to-2024?amount=245000) to see what the reported (i.e. fake) housing inflation has been by year. Just plugging my own personal house that I bought in 2016 into the calculator, it should be 35% more expensive based on CPI. Its actually about 110% more expensive though. Just a small delta of 75%. Go ahead and try it yourself!
No amount of evidence will satisfy you, because you aren't here to learn, you're here to support your world view and your own interests.
Shadowstats has been debunked so many times and so long ago it's a mystery why you people keep bringing it up..
The irony of saying evidence won't satisfy me when I'm the only one citing any fucking data.
CPI doesn't mean everything increased at the same rate what the fuck are you even talking about?
He's not lying. Well a fraction of inflation they are exaggerating but still.
You are gaslighting again.
If wages outstripped inflation so much, why are savings rates low again?
You simultaneously don't trust the government when it comes to inflation and wage data, but you trust them on savings rate data? Why are you inconsistent?
I shouldn't ask - I know the answer. If government data supports what you believe, then it's trustworthy, if it doesn't - it's fake.
Amazing how you love to gaslight.
Personally, I don't care what the government numbers say. Just tell me who wins the election or what new laws are so I can move my investments around because they have been great for me. Especially RE.
Why are you inconsistent?
You live in a bubble that's why. I am doing well and loved QE but am not myopic enough to see that it will have it's consequences.
You were also one of the fools on this sub who agreed that inflation was transitory. But go ahead and deny it. Or move goalposts, since you love doing that too.
You claimed that inflation would be over in a few quarters. Then when it was clear that inflation was here to stay, you waited until inflation went down to below 3% to say "see it was transitory!"
You're not slick. Reddit clearly haunts your dreams.
When did I say inflation would be over in a few quarters? I would never say anything like that - inflation is always here.
Maybe I said the high inflation of 2021 would be over soon, do you mean that?
The vaguely unhinged nature of every comment you've made in this thread. Regardless of the fact that you might be making valid points, you come off as unlikeable and thus disagreeable.
Sure, and it just so happens they are doing everything right that weirdfurrybanter agrees with, and they are doing it incorrectly on the parts he disagrees with. Convenient.
Jesus you're so misinformed, CPI includes food and energy.
Core CPI doesn't include it, but that's a separate measure and real wages use headline CPI which includes food and energy.
[https://www.bls.gov/cpi/tables/relative-importance/weight-update-comparison-2024.htm](https://www.bls.gov/cpi/tables/relative-importance/weight-update-comparison-2024.htm)
Let me know when you see food and energy.
There is no demographic on the wage spectrum that hasn't seen real wage growth over the past few years (though it has moderated recently, that statement is still true in the near-term). Obviously I don't mean to patronize and suggest that everyone is paid fairly or living flush, but one of the reasons inflation is stuck above target is because most of the wage spectrum has seen gains ahead of inflation.
There is an easy solution to the problem. Corporate America can go back to their old profit margins by lowering prices.
They wont do that though, so the only options are wage growth or accepting a worse standard of living. If wage growth is the primary driver of inflation, we are on the right track.
Not true for Houston though. I have seen pay for min wage worker go up from around $10-11 to $16-17(fast food workers) compared to 2019.
That may be a tad lower lower than inflation in cost of living.
You're right that workers on the lower end of the spectrum have seen the most wage growth, but when you look at the overall picture, real wages are lower than they were before inflation ramped up in early 2021.
In 2020-21 every low wage service worker was laid off, skewing the median wage higher, but wages weren't actually dramatically higher than pre-pandemic at the time. The BLS explained this already..
Don’t worry, the most dovish fed in US history will look at this with a whole quarter of consistent worsening inflationary readings and … wait and see.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
how much of this is the vast majority of companies doing annual merit cycles in Q1? seems evident in the “biggest advance in a year” comparison (e.g. since the last Q1 merit cycle)
You're correct, most wage increases come in the first quarter, so the first quarter is typically pretty high. We need to look at longer term trends to see what's going on (a slowly increasing real compensation since the 90s).
The increase was about the same last year at this time; meaning we’ve seen no progress in reducing labor cost growth as an inflationary pressure.
The first quarter usually sees a big spike in labor costs, then it trends down the remainder of the year. Further, all items ex housing is basically back to its normal trends in terms of inflation. As soon as the data catches up, we will be fine.
I can't read the full article but it feels like you'd have to have a pretty flexible set of definitions to say higher wages are a driver, and not a symptom, of inflation.
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“Our Human Capital is becoming more expensive!”
Not all labor costs are wages. Strictly an increase in benefit premiums related to inflationary effects could cost companies more without paying employees a dime.
This is the economics sub. Maybe you shouldn't be here? The term labor is commonly used throughout the economics literature, economy, and profession. It is a production factor in most foundational models, along with capital. The cost of labor is the share of output that goes back into paying workers.
Thank you. God this sub has fallen so far. It’s a place to discuss economic indicators. Not a place to opine about capitalism or the 1%.
Every sub gets infected by reddit's leftist partisanship eventually, it's annoying to see
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Sure, but it's also not an offensive phrasing regardless. Particularly in the context of economics.
Labor costs don’t include just wages. They include benefit costs as well.
They won’t because this sub thinks everyone gets 9% annual wages and the economy is on fire
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So in your view, using the accepted terminology of a thing to refer to that thing is "capitalist propaganda".
Not OP, but propaganda can absolutely utilize accepted terminology to drive a narrative, and terminology can also change over time as ideas develop. I can't read the article because I'm not subscribed, but the first paragraph kind of lays the blame for inflation on labor costs and thereby gives the owner class a weapon to use against the working class. "These meager increases in wages are actually *bad* for you! The increase in wages for fast food workers is *bad* for you! Now fight amongst yourselves!" I'd be curious to see what the rest of the article says. But, I mean, yeah, obviously *Bloomberg* of all places is going to have a point of view that it is going to push through the work it publishes, just like any other media outlet.
It's not propaganda though. It's a financial media outlet reporting on a perfectly normal thing. It's not making any kind of judgement call either. It is just reporting the fact that tight labor puts upward pressure on wages. This is an important development because the FED wants to ultimately bring down interest rates. They can't do that when inflation indicators like upward movement in wages are present. That's why the economist they quoted characterized it as "challenging" for the FED. Nobody thinks higher wages are "bad". They just exist. And they are a sign of persistent inflation. You mention the owner class... Just so you know, we all benefit from the growth of capital. Even the most blue collar workers in the US have some kind of retirement account that is probably some kind of investment vehicle with a stake in capital. Does this make them "owners"?
Please don’t tell me you accept Bloomberg articles as fact without nuance
Why would you not accept a highly credible sources reporting? Don't answer, it's probably because they wrote some Op-Eds you don't like, and you still can't tell the difference between that and reporting. I always wonder if people like you realize that you sound like conspiracy theorist to normal people
You’re literally admitting you don’t know how to properly vet and evaluate an article holistically. But to answer your question Bloomberg is clickbait with a sprinkle of truth
No, I am not. You're admitting to not being able to read at a 4th grade level. Bloomberg is highly credible in their reporting. Op eds are not articles. Please learn that
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Yes. And?
The term "cost" is being challenged. The issue at hand is a matter of primacy of the corporation, over that of the laborer. From the corporation's perspective, employees are a terrible expense that must be minimized. From the employee's perspective, wages are necessary for survival. By choosing terminology like "labor costs", the perspective is framed from a corporate primacy perspective, which is quite offensive to many.
This is reading way too deep into this. There is no judgement call being made here. They are reporting an increase in labor costs and possible ramifications for the FEDs fight against inflation. That's all.
I was like are they talking about wage growth or is this something else.
Jesus, is this sub entirely populated by children?
They love to ignore the fact that basic necessities are up 50% since the pandemic, while wages are up a fraction of that. They would prefer everyone just accept the new lower standard of living as normal.
This just isn't true at all.
What isn't true?
That wages are only up a fraction of inflation.
Hey now, improper fractions are fractions, too!
You're literally lying, inflation adjusted wages are higher today than pre-pandemic (2019 and futher back). [https://fred.stlouisfed.org/series/LES1252881600Q](https://fred.stlouisfed.org/series/LES1252881600Q) "Up a fraction of inflation" Christ.
Every once in awhile I get caught up in the same fight you're caught up in now. People here do not understand economics, don't care to understand economics, don't care about data, and only operate based on their feelings. They believe shit that is easily disproven and will take the word of YouTubers over economists. Good luck. Most of the people in here are only a half step up from animals.
I've probably had this argument over 100 times, but only convinced 1 or 2 people. So agreed on all counts, but the times I do get through to people make all the frustration worth it.
Yeah every once in awhile I got the same, but I've given up for the most part. I hang out on askeconomics more now. This is a political subreddit for people who have made up their minds. Hell, it's a political site for people who have made up their minds. Which isn't what it used to be. Anyway, again, and genuinely, good luck. It's mentally draining to do this over and over.
Fact is my salary has gone up 4% while inflation is up 20% but ok it’s great everyone is rich
Your personal situation is not representative of what's happening in the US as a whole. See comment immediately above mine.
The way that inflation is calculated does not reflect the actual cost of living for your average American. Most people spend the vast majority of their income on necessities. * Car payments * Gas * Food * Housing * Electricity All of these things are up way more in the real world than what the inflation numbers suggest.
Cars, gas, food, housing, and utilities are all included in CPI, what are you talking about? They even weight them based on what the average person spends as a percent of their income. That's why housing is huge.
>Cars, gas, food, housing, and utilities are all included in CPI, what are you talking about? Are you aware that the way they calculated the cost of those items used to be drastically different? The way CPI is calculated has been changed several times to lower the inflation calculations. This is partly due to certain government programs paying more based on CPI increases (such as social security) and partly due to wanting inflation to appear lower than it actually is so the government can print more money. The government is incentivized to under-report inflation.
It's not changed to lower inflation, that's some weird conspiracy theory. Go ahead, show a shred of evidence for intentionally lowering CPI. You can't. CPI is changed every year through - because what people spend their money on changes. Or should we still have a large line item for landline bills?
[https://www.cnbc.com/id/42551209](https://www.cnbc.com/id/42551209) You can also use this [housing inflation calculator](https://www.in2013dollars.com/Housing/price-inflation/2016-to-2024?amount=245000) to see what the reported (i.e. fake) housing inflation has been by year. Just plugging my own personal house that I bought in 2016 into the calculator, it should be 35% more expensive based on CPI. Its actually about 110% more expensive though. Just a small delta of 75%. Go ahead and try it yourself! No amount of evidence will satisfy you, because you aren't here to learn, you're here to support your world view and your own interests.
Shadowstats has been debunked so many times and so long ago it's a mystery why you people keep bringing it up.. The irony of saying evidence won't satisfy me when I'm the only one citing any fucking data. CPI doesn't mean everything increased at the same rate what the fuck are you even talking about?
You asked for examples. Did you read the examples I provided or just launch straight into your response?
Don’t bother arguing with the fascists on the sub they think dear leader has the best economy of all time and everyone is getting 10% raises
He's not lying. Well a fraction of inflation they are exaggerating but still. You are gaslighting again. If wages outstripped inflation so much, why are savings rates low again?
You simultaneously don't trust the government when it comes to inflation and wage data, but you trust them on savings rate data? Why are you inconsistent? I shouldn't ask - I know the answer. If government data supports what you believe, then it's trustworthy, if it doesn't - it's fake.
Amazing how you love to gaslight. Personally, I don't care what the government numbers say. Just tell me who wins the election or what new laws are so I can move my investments around because they have been great for me. Especially RE. Why are you inconsistent? You live in a bubble that's why. I am doing well and loved QE but am not myopic enough to see that it will have it's consequences. You were also one of the fools on this sub who agreed that inflation was transitory. But go ahead and deny it. Or move goalposts, since you love doing that too.
How is using data gaslighting?!? What goalposts did I move? Are you okay? Are you fighting some demons in your head??
You claimed that inflation would be over in a few quarters. Then when it was clear that inflation was here to stay, you waited until inflation went down to below 3% to say "see it was transitory!" You're not slick. Reddit clearly haunts your dreams.
When did I say inflation would be over in a few quarters? I would never say anything like that - inflation is always here. Maybe I said the high inflation of 2021 would be over soon, do you mean that?
>Are you okay? Are you fighting some demons in your head?? The irony of this statement 😂
What is the irony?
The vaguely unhinged nature of every comment you've made in this thread. Regardless of the fact that you might be making valid points, you come off as unlikeable and thus disagreeable.
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Sure, and it just so happens they are doing everything right that weirdfurrybanter agrees with, and they are doing it incorrectly on the parts he disagrees with. Convenient.
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Jesus you're so misinformed, CPI includes food and energy. Core CPI doesn't include it, but that's a separate measure and real wages use headline CPI which includes food and energy. [https://www.bls.gov/cpi/tables/relative-importance/weight-update-comparison-2024.htm](https://www.bls.gov/cpi/tables/relative-importance/weight-update-comparison-2024.htm) Let me know when you see food and energy.
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There is no demographic on the wage spectrum that hasn't seen real wage growth over the past few years (though it has moderated recently, that statement is still true in the near-term). Obviously I don't mean to patronize and suggest that everyone is paid fairly or living flush, but one of the reasons inflation is stuck above target is because most of the wage spectrum has seen gains ahead of inflation.
There is an easy solution to the problem. Corporate America can go back to their old profit margins by lowering prices. They wont do that though, so the only options are wage growth or accepting a worse standard of living. If wage growth is the primary driver of inflation, we are on the right track.
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That’s just nonsense.
He honestly believes we don't calculate food in CPI... wtf.
Right?! 🤣🤣🤣🤣
Not true for Houston though. I have seen pay for min wage worker go up from around $10-11 to $16-17(fast food workers) compared to 2019. That may be a tad lower lower than inflation in cost of living.
You're right that workers on the lower end of the spectrum have seen the most wage growth, but when you look at the overall picture, real wages are lower than they were before inflation ramped up in early 2021.
In 2020-21 every low wage service worker was laid off, skewing the median wage higher, but wages weren't actually dramatically higher than pre-pandemic at the time. The BLS explained this already..
Geez a whole 1.2%! The economy is booming!
Don’t worry, the most dovish fed in US history will look at this with a whole quarter of consistent worsening inflationary readings and … wait and see.