That’s a quote from reader JohnH. I think whether this statement is true depends on wage measure, deflator.
Source: East et al. (2023).
A comprehensive analysis of the data is in this article.
Using the most recent data (and assuming Chained CPI is unchanged in November; Cleveland Fed nowcast has CPI declining -0.01% m/m).
Figure 1: Average hourly earnings in total private nonfarm payroll (blue, left log scale), and in leisure and hospitality services (tan, right log scale), in 2022$. Deflation using CPI chained, seasonally adjusted by author using X13. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, NBER and author’s calculations.
Note that Cleveland Fed nowcast for CPI in November is -0.01% m/m.
Whether the statement that wages are stagnating or not also depends on our definition of stagnation. In the best case scenario, wages have risen a total of about 1.5% over 3.5 years (0.4% per year.) Other scenarios put it at 0.2% per year. I calll that stagnation. What’s your definition of stagnation?
BTW, here’s Krugman: “It is a truth universally acknowledged — well, anyway, a truth acknowledged by everyone I know who thinks about the subject — that a hot economy leads to higher wages and prices. When demand for labor is strong, workers can and do demand wage hikes; when demand for goods and services is strong, businesses have “pricing power,” or the ability to raise prices without losing customers.”
https://www.econlib.org/krugman-on-the-effects-of-a-hot-economy/
Two pieces of arrant nonsense (1) Hot economy leads to higher real wages and 2) workers demand wage hikes) One piece of truth: business have pricing power.
https://www.nytimes.com/2022/06/24/opinion/inflation-unemployment-prices-economy.html
You are pulling some cherry picked quote ala Scott Sumner? God – you do have the bottom of the barrel for your little sources.
No, pgl, those were not Scott Summer’s words, they were Paul Krugman’s. And I posted the link to where Krugman actually said them.
I get it was a cherry picked quote ala Sumner abusing what Krugman really said. Dude – I would ask if you are that stupid but we know you are. Damn!
he said higher wages, not higher real wages. and i have picked this bone with you in the past. you need to justify why real wages should be rising at the rate you want. real wages should not rise just because johnny says we should have higher real wages. that is a completely different story from rising wages in general.
johnny, you are the resident communist here. but there is a reason why your societal approach to wealth has not succeeded anywhere in the world. it has been tried many times, but always failed spectacularly. why do you keep advocating for a communist economic model that has been shown from real world experience to not be successful? johnny, show me where the communist model that you advocate for has been successful?
So here’s Johnny:
1) Claiming he knows more about economics than a winner of the Nobel economics prize. Actually disparaging the Nobel Prize winner’s claims about economics.
2) Showing that words he uses are chosen for their ambiguity – “depends on our definition of stagnant” says Johnny. Not “our” definition, Johnny.
3) Cherry picking his dates to include the period immediately following recession, when wage growth is typically weak.
Johnny keeps making claims about economics that require ignoring lots of data, using weasel words, careful choice of end points. His tricks and errors always lean in the same direction – U.S. BAD!!!
Johnny is a hack, and not even a good one.
“Whether the statement that wages are stagnating or not also depends on our definition of stagnation.”
Yea this lying hack actually wrote this. Jonny boy is nothing more than a carnival barker.
So, Mr. Genius Peppa Pigly, why don’t you provide us with economists official definition of stagnation?
According to one definition is “Stagnation is a condition of slow or flat growth in an economy.” Sounds like that aptly characterizes the growth in real wages.
Sort of like suppression I guess. Youi indeed are even more pathetic than Princeton Stupid Steve.
Ducky:
1) Criticizing Krugman– he deserves to be criticized when he makes a false assertion –“a hot economy leads to higher wages”. Ducky probably didn’t notice (he largely ignores wage issues) that real wage growth over the past four years has not led to much in the way of real wage increases–so slow in fact that they are virtually immaterial. In fact, real wages over the past 3.5 years haven’t even manage to increase at the pathetic AVERAGE annual increase of the past 40 years. This, despite a near-record low tightness in labor markets and in the unemployment rate for the past two years. Krugman’s assertion simply does not hold true for the current situation. https://fred.stlouisfed.org/series/LES1252881600Q
2) What’s your “official” definition of wage stagnation? Do you even know what it is?
3) No cherry picking here. If you had bothered to read the host’s post, you would have seen that I used the same dates that he did in the first chart of the above post.
Oh, and BTW…Krugman’s assertion that workers demand wage increases is blatantly false: “The surprising truth about asking for raises at work: Men are almost as unlikely to ask as women” https://fortune.com/2023/04/05/pay-gap-men-versus-women-asking-for-raises-pew/
And we know from an earlier thread that 60% of women don’t ask for wage increases. Krugman is just reciting from economics’ catechism.
Maybe Ducky should try educating himself before lashing out at someone who inconveniently points out his misconceptions.
Most people know that most people get those wage increases–the big ones anyway–by *switching* jobs. Not JohnH, apparently.
Funny, Jacob. “most people know”…except researchers who have actually surveyed workers. They found that “A little over a quarter of women (28%) asked for higher pay the last time they were hired for a new job, according to new research released Wednesday by Pew Research Center. But men were only slightly more likely (32%) to have requested more pay when last hired. ”
https://fortune.com/2023/04/05/pay-gap-men-versus-women-asking-for-raises-pew/
Next time you might try reading my links…
So much for economists’ myth that labor “demands” higher wages. Sheer poppycock.
You go to business friendly Fortune magazine for economic research? Yea – you were always a right wing hack.
Dear host – can you please stop this incessant trash on your blog. So many words, so much stupidity.
pgl can’t tolerate data that doesn’t conform to the economics catechism!
Your trash is not data dude. Come on Jonny boy – everyone gets you are both dumber than a rock and more dishonest than Trump.
“Criticizing Krugman– he deserves to be criticized when he makes a false assertion –“a hot economy leads to higher wages”. Ducky probably didn’t notice (he largely ignores wage issues) that real wage growth over the past four years has not led to much in the way of real wage increases–so slow in fact that they are virtually immaterial. In fact, real wages over the past 3.5 years haven’t even manage to increase at the pathetic AVERAGE annual increase of the past 40 years. ”
actually, ”
from what i understand, there is not a lot unusual here. nominal wage growth usually grows during periods of inflation. real wages, however, do not typically grow much during periods of inflation. real wages do best in low or stable inflation environments. johnny, you are conflating the two items. and over the long run, real wages will grow although with variability over that time. workers increase real wages because of productivity implemented over time. so it is not unusual for real wages to have grown slower over the past few years than the 40 year average, when we have been in a period of high inflation. you do not seem to be acknowledging these conditions, johnny.
Jonny boy is doubting the premise that a strong economy ceteris paribus might be good for real wages as Jonny boy was David Cameron’s butt boy back 10 years ago when Cameron was pushing fiscal austerity during a weak UK economy. Real wages fell a lot back then but we know both Cameron and Jonny boy kept saying the fiscal austerity was good for UK workers.
Yea Jonny boy has been lying about this for over a decade.
“I think whether this statement is true depends”
Depends on…. Look, this is simple. JohnH routinely lies about everything under the sun. We know that already. Time to move on as his comments are always distortions.
“My favorite nonsense is the regular assertion by Krugman and others that labor drives inflation by demanding higher wages.”
A complete misrepresentation of what Krugman “and others” have said. Jonny boy loves to build his worthless self up by tearing smart people down with such misrepresentations. That is all he knows how to do.
Sorry pgl, this is no misrepresentation of what Krugman said. It’s right there in the link I provided. You’re the liar.
Cherry picking out of context is honesty in your book? OK!
Sure, sure, pgl…Krugman contradicted himself in his own piece…where do you get off, liar?
You actually think you caught Krugman in a contradiction? Oh wait – you do not know how to think. Never mind.
johnny intentionally confuses the distinction between real and nominal wages when making these arguments. this is where his “contradiction” arguments stem from. he intentionally inserts one of those terms into the statements that krugman never actually said, as if it were true. krugman never said real wages increase with inflation. he said wages increase with inflation. johnny inserted the term “real”, intentionally, and then proceeded to argue krugman was contradictory. not true at all. it stems from the dishonest arguments our communist friend johnny has been making. johnny, this is what is called lying. if you had been raised by good parents, they would have taught you better.
And later little Jonny boy asked me where Krugman contradicted himself. Little Jonny does not know as it never happened.
“In addition, gains in pay have been particularly strong for lower-wage workers. For example, while overall ECI deflated by PCE remained roughly constant since 2019, it is notably higher than 2019 for the lowest-wage industry.”
There is a lot of good analysis in this discussion you linked to but I wanted to focus on this as lying little Jonny boy keeps harping that the low income workers have suffered even as high income workers have not. No – the facts show just the opposite. Then again we know little lying Jonny boy has a perfect record of getting everything wrong.
No, pgl. Krugman asserted that workers benefit from a hot economy. He did NOT say that only a few cherry picked cohorts benefit. In fact, if he had, it would most likely have applied to workers in the top 10%, the ones who take home most of the wage gains (but most mainstream economists don’t like to talk much about that!)
Did Krugman kill your pet poodle or what? Oh wait – you are the pet poodle. Never mind.