Economists Worry About Sharp Increase in Wages

Economists Worry About Sharp Increase in Wages

(ConservativeStar.com) – The term “real wages” takes into account actual income offset by the cost of goods and services, and that’s a very real problem around the world right now. While the push for a $15-per-hour minimum wage sounds like a great idea on the surface, digging deeper and looking at other economic factors paints a somewhat darker image.

Economists at the United States Federal Reserve Bank (The Fed) are saying current inflation trends are only “transitory” because of, in part, supply chain issues brought on by the worldwide pandemic. At the same time, some economic theory experts believe it’s likely that The Fed will announce measures meant to “address building inflationary pressures.”

According to a story on Breitbart News, on average, hourly workers’ income increased 0.4% from June to July, while the Consumer Price Index rose 0.5%. That means the “real wage” actually went down. Several economists have fears that the combination may lead to a period of stagflation — rapid inflation plus economic recession — creating conditions reminiscent of the problems of the 1970s and the recent Great Recession.

Only time will tell what the result will be, but can we really afford for The Fed to be wrong?

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