The most confounding aspect of the economy, and the one metric that has flashed a red light on Janet Yellen’s “labor market dashboard” for years, is that wage growth has been completely non-existent, and roughly at half the Fed’s targeted level of 3.5-4.0%.
What’s worse, and what the Fed may not even realize is that while Yellen is looking at the average wage growth for the entire US population which has been flat as a pancake for the past 6 years, completely oblivious of how many trillions the Fed monetizes or what the stock market does…
… the wage reality for the vast majority of the US working population, or the 98 million non-supervisory workers which comprise 83% of total US private payrolls, is that their wages are not only not rising, or even flat, but for the past year have been declining at a rapid pace after hitting 2.5% in early 2014.
And as the purists will immediately point out, in inflation-adjusted terms there is no wage growth for more than 4 out of every 5 workers.
So for all who are still confused why there are no wage hikes despite the Fed’s relentless efforts to micromanage the economy and stimulate wage growth via trickle-down record high stock market prices, the answer is that there is wage growth.
Just not for 83% of the working population.
As the chart below shows, wages growth is not only present but has recently again surged to a near all time high level for the 17% of the US workforce that consists of supervisors, managers and various other bosses.
And so if the Fed really demands on micro-managing its centrally planned economy in which managers, supervisors, and CEOs are already benefiting massively courtesy of the record amount of stock buybacks they have unleashed, which have boosted not only their publicly traded stock price but their equity-linked compensation to record levels, it may want to make it clear that wage growth for supervisors will henceforth be prohibited.
