U.S. worker productivity picked up modestly in the second quarter but showed little sign of breaking out of the sluggish trend that has prevailed for more than a decade, holding back economic growth and living standards. The lethargic pace of productivity growth seen in recent years could have a critical effect on the future trajectory of wages, prices, overall economic output and government budget balances. . . . “If labor productivity grows an average of 2% per year, average living standards for our children’s generation will be twice what we experienced,” Federal Reserve Vice Chairman Stanley Fischer said in a July speech. “If labor productivity grows an average of 1% per year, the difference is dramatic: Living standards will take two generations to double.”
A run-up in stocks helped deliver a banner year for America’s public pensions. But the gains won’t be nearly enough to ensure all state and local retirees receive their promised future benefits. Large U.S. systems that oversee retirement funds for police, firefighters, teachers and other public workers earned median returns of 12.4% in the fiscal year ended June 30, according to Wilshire Trust Universe Comparison Service. That is their best annual result since 2014. Yet many of these public pensions remain severely underfunded despite the recent gains, meaning they don’t have enough assets on hand to fulfill all promises made to their workers. Estimates of their collective shortfall vary from $1.6 trillion to $4 trillion.
The acceleration in wages on a monthly basis may show that managers are finally starting to boost pay some more in a bid to keep or attract workers. Even so, the 2.5 percent pace of annual wage growth is little changed over the past two years, owing to factors including weak productivity, as well as people returning to the labor force and accepting lower-skilled work.
The L.A. metro area’s median base pay grew 0.5 percent in a one-year period through July 17 to $59,064, below the national average of 1.2 percent, according to a report from jobs website Glassdoor released Tuesday. The figures mark the slowest pace of wage growth in three years, indicating a continued slowdown in pay increases nationally, despite low unemployment and healthy jobs numbers, according to the report that is based on millions of anonymous salary reports shared on Glassdoor.
You probably haven’t heard much about the looming pension crisis because elected officials don’t like talking about it and it’s easy for them to kick the can down the road: they can make promises to public employees now that won’t come due until they’re out of office.
But the slow creep of pension costs is crowding out investments in other areas, including education, environmental stewardship, social services, and public transportation. In essence, the state is being forced to default on its social obligations to pay for its pension obligations. If you’re a progressive, fixing this problem may be the most important issue facing the state.