Open Thread July 14, 2023 Labor Costs are an Issue?
Powell: “Labor costs are really the biggest factor in most parts of that sector (service),” Powell said. “We need to see a better alignment of supply and demand in the labor market and see some more softening in labor market conditions so that inflationary pressures in that sector can also begin to subside.”
Open Thread July 9, 2023 US Debt, Angry Bear, angry bear blog
Here’s another POV on inflation, with data:
“Inflation went up mainly because of pandemic supply shocks and partly because we overdid federal stimulus a bit. There were also some temporary factors, like the Ukraine war and crop problems. When those subsided, so did inflation. The Fed has had almost nothing to do with it.”
Not really contradictory. Read the rest here:
https://jabberwocking.com/why-is-inflation-down/
Inflation Cools Sharply in June, Good News for Consumers and the Fed
NY Times – July 12
The Consumer Price Index climbed far more slowly in June, a relief for shoppers and a hopeful — though inconclusive — sign that America might pull off a “soft landing.”
Inflation cooled significantly in June, offering some of the most hopeful news since the Federal Reserve began trying to tame rapid price increases 16 months ago — and boosting the chances that the central bank might be able to stop raising interest rates after its meeting this month.
The Consumer Price Index climbed 3 percent in the year through June, according to data released Wednesday, less than the 4 percent increase in the year through May and just a third of its roughly 9 percent peak last summer.
That overall measure is being pulled down by big declines in gas prices that could prove ephemeral, which is why policymakers closely watch a more slimmed-down version: the change in prices after stripping out food and fuel costs. That metric, known as the core index, offered news that was even better than what economists had expected.
The core index climbed 4.8 percent compared with the previous year, down from 5.3 percent in the year through May. Economists had forecast a 5 percent increase. …
BTW,
Labor costs are really the biggest factor …
‘Labor Costs’ are what employers pay their workers to do their jobs, I believe.
… ‘burdened’ by all those extras, like medical care arrangements and FICA expenses, which are not in take-home pay, alas.
Wikipedia: Labor burden costs include benefits that a company must, or chooses to, pay for employees included on their payroll. These costs include but are not limited to payroll taxes, pension costs, health insurance, dental insurance, and any other benefits that a company provides an employee. …
Beside that point, inflation of wages for low-paid workers is good for society. When it happens, it will of course produce some general inflation; but that merely represents transfer of resources to the bottom rung of society, in contradistinction to the relentless upward transfer that has characterized the past 50 years of neoliberalistic control by monopoly power.
Workers wages have lagged for decades. Their share of economic growth dropped dramatically. Has anyone done the math on where they are compared to where they would have been if their share of growth in the 50’s – 70’s had been maintained? Are they still playing catch-up?
Jane E
I think the math has been done. At least I have seen a number of reports that seem to say wage growth has not kept up with “inflation” this time around. Frankly, I don’t think it ever has.
On the other hand…there is an argument, and it has some validity in a cruel world: that wages in some job categories have not kept up because the contribution of those workers to GDP is less than it was because of technology and outsourcing (which could mean “our contribution to ending world poverty”.
Don’t yell at me. I believe that wages should keep up with “a decent standard of living”…including medical insurance and retirement insurance, and that any person’s time is worth as much as any other person’s….so that if the lawyer’s cleaning lady saves him two hours from housework so he can spend two hours practicing law, her pay ought to reflect the ‘opportunity” her labor gives the lawyer to make money at his trade. On the other hand there are obvious objections to this that might be considered “fair,” but the principle it suggests should be at least part of the price of labor, which, if you think about it, suggests that the above “contribution to GDP” is consistent with….and should remind us that “contribution to GDP” would increase automatically if the pay was increased. in the end it’s a political question which the “law of supply and demand” does not supply complete answer to.
Maybe a lawyer is more likely to have a cleaner than a pet groomer, thereby tightening the market for cleaners. But not sure why cleaning up a mess should be paid less because the pet groomer happened to make it. The cleaner is getting paid to clean and there is no impact on what the hiring person does with the time. Maybe the lawyer just sleeps a couple more hours and makes no money, so should the cleaning be free?
Eric
i think you are working too hard to hve something to say about this. I was trying to make two points:
First, low paid (menial?) labor contributes more to GDP than economists realize because their work creates opportunity time for higher paid workers.
Second, again something economists don’t recognize (except Marx?) human time is precious to them. There should be some recognition by “us” (non-economic man) of this in paying workers according to the time they spend working for us over and above “what they are worth in supply and demand market place.” My pet grievance (not the most important consideration) is watching ordinary people who should know better because there are times at the DMV when business is slow that some workers are “just standing around” just as some employers go crazy when a worker is not making money for him every minute he is being paid. apparently the boss’s time is worth more than the worker’s time.
and third: if the workers were paid more they would, ipso facto, be contributing more to GDP. Just trying to elevate your attitude.
major “typo”: left out ordinary people who should know better go crazy because a DMV worker is just standing around doing nothing”
Eric
if the lawyer wants to take a nap that’s his business. Maybe he will wake refreshed and more productive. But whatever he does with his day, the leaning lady gives him more time to make more money at his trade. Maybe you did not understand that I was talking about a “principle” and not suggesting that every low paid job be linked to some higher paid job to determine the hourly wage…adjusted of course for the time the higher paid worker does not adtually spend on his work relative to the number of hours he could have spent if he was more interested in money than time.
Biden Cancels $39 Billion in Student Debt for 800,000 Borrowers
NY Times – July 14
One-time credits will wipe out loans, fixing mistakes made by loan servicers when collecting payments under income-driven repayment programs.
More than 800,000 borrowers will have $39 billion in federal student loan debt eliminated under a government effort to remedy years of mistakes by the loan servicers that collect payments on the government’s behalf.
Millions more people will have their loans adjusted as part of the program. That process will continue into next year.
The relief will go to those who have federal loans owned directly by the Education Department and who enrolled in income-driven repayment plans or would have qualified for loan forgiveness if they had done so. Those plans cap the payments that borrowers owe to a percentage of their income. Under those plans, borrowers must make payments for a term that is typically 20 or 25 years. At the end of that period, any remaining balance is forgiven.
More than eight million people use income-driven repayment plans, but for decades, many of the companies that bill borrowers made extensive mistakes in tracking payments and in guiding borrowers through the payment process. Those errors put millions of borrowers further behind by years in their quest to pay off their loans. …
What to know about the Biden administration’s new student loan forgiveness plan
Boston Globe – Just In
… Here’s what to know about the plan.
What are the fixes being implemented?
The Education Department said the adjustments are being applied to ensure that borrowers enrolled in income-based plans are credited for the payments that allow them to qualify toward forgiveness under federal law.
The adjustments are meant to address “historical failures” that led to payments that should have moved borrowers closer to forgiveness not being counted. Inaccurate counts have “resulted in borrowers losing hard-earned progress toward loan forgiveness,” the department said.
Who does the forgiveness apply to?
The plan applies to more than 804,000 borrowers who enrolled in income-driven plans. Approximately $39 billion in federal student loans will be forgiven.
Borrowers are eligible for forgiveness if they have made the equivalent of either 20 or 25 years of monthly payments on an income-driven plan, according to the Education Department. The number of required payments depends on the type of loans, when the loans were taken out, and what repayment plan the borrower chose.
Eligible borrowers include those with Direct Loans or Federal Family Education Loans that are held by the education department (Parent PLUS loans apply) “who have reached the necessary forgiveness threshold as a result of receiving credit toward IDR forgiveness” for any of the following periods:
Any of the months listed by the department that occurred before a loan consolidation will also be counted toward forgiveness.
How can I tell if my loans are held by the Education Department?
To determine if a loan is owned by the Education Department, follow these steps:
When will eligible borrowers be notified?
Qualifying borrowers will be notified as soon as Friday and in the coming days.
The Education Department will continue to notify borrowers who reach forgiveness thresholds every two months until next year. At that time, all borrowers who do not currently qualify for forgiveness will have their payment counts updated. …
Boston Globe: … The announcement follows last month’s Supreme Court ruling that overturned President Biden’s controversial proposal to cancel $400 billion in student loan debt, including up to $20,000 in relief for borrowers who met certain conditions. …
Pepsi sales were way down but Pepsi — who had doubled prices — saw record profits.
Hello Chairman Powell!
20 years of debt slavery
because you bought into the “education” scam.
sounds fair to me.
Trump plans to increase presidential power over agencies
NY Times – July 17
Donald J. Trump and his allies are planning a sweeping expansion of presidential power over the machinery of government if voters return him to the White House in 2025, reshaping the structure of the executive branch to concentrate far greater authority directly in his hands.
Their plans to centralize more power in the Oval Office stretch far beyond the former president’s recent remarks that he would order a criminal investigation into his political rival, President Biden, signaling his intent to end the post-Watergate norm of Justice Department independence from White House political control.
Mr. Trump and his associates have a broader goal: to alter the balance of power by increasing the president’s authority over every part of the federal government that now operates, by either law or tradition, with any measure of independence from political interference by the White House, according to a review of his campaign policy proposals and interviews with people close to him.
Mr. Trump intends to bring independent agencies — like the Federal Communications Commission, which makes and enforces rules for television and internet companies, and the Federal Trade Commission, which enforces various antitrust and other consumer protection rules against businesses — under direct presidential control. …