Comment by rossdavidh | Hacker News Reader

Comment by rossdavidh | Hacker News Reader

So, I do think it is good for wages to go up, especially at the low end, but I notice that every time they directly quoted Jerome Powell, it sounded way more reasonable than their summaries in between those quotes.

It has long been orthodox policy that wages should not rise faster than productivity. We are seeing the reason for this right now: when they do, then inflation rises faster than wages (or profits).

If, as the article asserts, inflation were caused by "corporate monopolies", then we would see the least inflation in markets like housing, or equities, or grain, where there are many producers to choose from. Instead, these are three of the highest-inflation sectors lately.

None of this is meant to suggest that the Fed is doing everything correctly or well, but there are good and valid reasons to be concerned when wages rise faster than productivity, or when there are many job openings for each applicant, because neither of those situations actually results in us (the non-corporations) being better off.

Inflation was not exceeding corporate profits.

If it's good that wages raise slower than productivity - that means it's good that workers always get a smaller share of the pie.

This, I do not think, is a universally agreed upon opinion.

True, but I think the target should be that wages rise at the same rate (over the medium term) as productivity. If wages rise higher for a year, it's not an issue. But inflation (including wages) has been rising for well over a year now.

Now, it is also true that if wages rise slower than productivity, that should also concern the Fed, and they haven't been as concerned as they should have. However, given that they switched to a positive (2%) rate of inflation for their target a few years back, they are at least acknowledging the problem. But I agree that wages rising slower than productivity ought to be acted on as well.

This assumes that current ratio of wages per unit of productivity is in balance. Many would argue that wages are too low for many jobs relative to productivity. The Fed consciously takes action to keep that poor ratio for workers the status quo ante.

> So, I do think it is good for wages to go up [...]

It can be. But too much it auto-fuels the inflation which is the feared scenario: inflation a-la-seventies.

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