Higher Prices? Boo! Higher Wages? Yay! Higher Prices? Boo . . .
It started out cheerful, but things took a dark turn. Such is the life of a Random Walk. Enjoy!
Things we think
Jason Furman is an economics professor at Harvard. He was also a senior advisor to the swankiest sexagenarian the Vineyard has ever known.1 Furman has bona fides. Furman recently pointed out that while wages are going up—generally considered a good thing—prices are going up even more. Put it all together, and real compensation is now lower than it was in March 2019, i.e. months before Covid:
That’s not good, but it’s also a bit strange.
Labor markets seem pretty tight. Jobless claims continued to fall, while job openings are at record highs. Now-time should be the best-time to be working . . . and yet, it’s not. From a purchasing-power standpoint, workers are making even less than they did before. Presumably, even if wages rise (even) more to satisfy that demand for labor, prices will only continue to rise, wiping out any gains to wage-earners.
Now, perhaps the…
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