American consumer prices rose by 5.4% in the year to September, according to figures published on October 13th, exceeding economists’ forecasts
NOT LONG ago pundits obsessively checked the latest statistics on covid-19 cases. Now they are doing the same with the inflation numbers. . A survey from the New York Fed released the previous day showed a small pickup in consumers’ inflation expectations. In its semi-annual report on the global economy the IMF warned that the prospects for inflation were “highly uncertain”. Soaring energy costs will push up consumer prices in the near term.
No wonder then that pay has become a hot topic in the corporate world. On October 6th Bank of America increased its company-wide minimum wage by 5%. Amazon now boasts of roles in transport and packaging paying $22.50 an hour in America, making left-wing activists’ demands for a federal minimum wage of $15 seem quaint.
Only a few years ago economists were bemoaning weak wage growth. So it may seem churlish not to pop the champagne now that the opposite is happening. But pay can rise for a variety of reasons, some more benign than others. For a given level of productivity, higher wages must show up in one of two ways: as higher inflation or as a higher “labour share” of GDP.
Other firms, however, may absorb higher wages by accepting lower profits. That would change the distribution of the economic pie, raising the “labour share”, or the proportion of GDP paid to workers as wages. Our analysis suggests that the labour share in the G7 has risen by about one percentage point since the pandemic began—equivalent to $400bn or so of extra real income for households each year.
France Dernières Nouvelles, France Actualités
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