Although many economists—including at least some sitting central bankers—believe that nominal wage growth provides little forward-looking information about broader inflationary trends, policymakers have generally found wage growth useful in helping to assess the amount of slack in the labor market—a key consideration in monetary policy decisions, particularly at a time like today when labor market measures are sending differing messages about the degree of slack. Indeed, Fed Chair Janet Yellen has listed wage growth as one of a handful of measures she is closely watching as the Fed stands poised to embark on its first rate-hiking cycle in ten years.
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The US is not the only country facing low wage growth and the Fed is not the only central bank focused on it.
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But minimum wages around the world vary dramatically...
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As total compensation is made up of ever increasing amounts of government transfers...
MIT professor Erik Brynjolfsson, author of Race Against the Machines and The Second Machine Age, argues that technology is fundamentally changing labor markets and increasingly displacing higher-skill, higher-wage workers. He is hopeful, however, that a new approach to education as well as entrepreneurship can result in new industries that “not only create value for consumers, but also leverage a lot of people and put them to work in new ways.”
"Median incomes are stagnating and have even fallen since the 1990s. And there is no doubt in my mind that technology is a big part of that." - Erik Brynolfson
Of course, for much of Europe, none of that matters as the worker is much more protcted than the average American...
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Source: Goldman Sachs