Wages

They’re going up. Total salaries and benefits moved up 4.4% in 2014, rising to 53.6% of GDP, still below historic averages, but a decided bounce off the lows recently seen (Chart 1).

One reason wage growth has held pretty steady over the past few years is that lower-wage jobs have been added at a faster pace than higher-wage jobs. But it looks like wages for these lower paying jobs are moving up more quickly than for higher paying jobs. Two different measures of wage growth show an accelerating trend (Chart 2).

Not coincidentally, we’re also seeing corporate profit margins flatten out, meaning it looks like a greater share of income is shifting to workers. This may have (negative) implications for equity markets, but it’s one of the reasons the US economy should bounce back from the anemic (0.2%) growth rate of the first quarter.

• 23 May, 2016

  Inside the Triangle

  Complexity makes investing so challenging. Unlike the pure sciences, there are no hard truths in investing, no ...

• 27 Oct, 2014

  The Present is the Future (at least in bond land)

  In our long-term assumptions, we generally assume that the total return in fixed income is pretty close to its starting ...

• 31 Jan, 2021

  Stop the Game!

  Jesse Livermore was a legendary stock trader of the early 20th century. Mere rumors of his involvement in a stock could ...