[Apologies for the light posting: I’ve been traveling, and there isn’t a lot of news this week.]
A couple of months ago I wrote that raising wages may have become a “taboo,” i.e., that in some cases employers may be refusing to raising wages, even though it may be costing his money. One of the items I relied upon was from the NFIB, as small business owners presumably are not “monopsonies.” As of February, the last time I had data, small business owners were complaining of inability to fill positions, but were not raising wages.
Over the last three months, that may have changed, as revealed in the NIFB survey from May. Let’s compare hiring in small business through February:
and now through May:
In the last three months, employment growth per firm has finally broken out to the upside.
Meanwhile, unfilled job openings in small businesses, which have been soaring for the last five quarters (red dots, blue dot at end is for month of May):
are finally giving rise to actual wage increases over the last three months (red dots in the below graph are monthly):
This is supportive of the YoY% growth in average wages for nonsupervisory workers as of last week’s employment report for May:
As I noted then, it looks like wage growth for ordinary workers may finally be starting to accelerate.
While it seems crystal clear that the tax cuts for large businesses are just going into stock buybacks, it is certainly possible that small businesses are using some of their extra cash to increase pay for new workers.
If the behavioral paradigm I hypothesized — that the taboo against raising wages has been undergoing an extinction burst — the most recent data from the NFIB supports that employers are finally conceding that the Great Recession-era behavior of freezing wages is no longer successful.
Recall that during the oil boom in Williston, the minimum wage became a non issue because even the McDonalds had to pay $15 and up an hour to get workers. I suspect the US economy is getting close to that level, in particular if you consider drug users unemployable. I do see it where I live a new QuickChick advertises management positions up to $14. Of course that is essentially across the street from WalMart which essentially raised the local minimum to $10 recently. (Note this is a semi rural community that historically has had low unemployment rates not a big city)
Que the Fed raising rates do to fears of wage driven inflation. Just as happened in the 90’s. Every I smiled that finally labor was getting its due, Greenspan made sure it was squashed.
Daniel is essentially replaying Shay’s rebellion’s cause the desire for high inflation in debtor land (Springfield Ma) and low inflation in creditor land (Boston at the time). This is one reason the Constitution was set up to ensure that the creditors remain in control not the debtors. Also invoking the issues of the 1896 presidential election where Bryan wanted more inflation and McKinley did not.
Could it be the job killing $15 minimum wage in Seattle? I can’t keep up with all the new restaurants opening up anymore. Even worse, they’re adding meals and side businesses like bars and bakeries.