Everyday, California government officials are looking for people to fill thousands of full-time vacancies. Their recruiting is heating up. Forty percent of state employees are eligible to retire, and only about 10 percent of the workforce is under age 30, compared to about 25 percent of the overall workforce in California in that age group.
In 1987, during the last period of productivity hand-wringing, Nobel Prize winning economist Robert Solow quipped: “You can see the computer age everywhere but in the productivity statistics.”
U.S. workers’ wages and benefits may be picking up faster than previously thought.
The finance department opposes this year’s minimum wage bill because it would boost the state payroll by an estimated $1.2 billion once the wage reaches $13 in 2017. Finance officials also think the economic impact of a $13 minimum wage likely would be negative because it would slow the growth of employment.
Productivity growth is central to a range of economic questions from the slowdown in middleclass incomes in recent decades to the outperformance of employment over output in the current recovery. Looking forward, productivity growth is essential to understanding how quickly wages can grow, how fast the economy can grow, and the magnitude—and potentially even the existence—of a long-term fiscal gap.
Revenue growth expectations fell from 5.4% last quarter to 3.1% this quarter, and earnings growth expectations fell from 10.6% to 6.5%. Both metrics now sit at their lowest levels in the five-year history of this survey (on a country basis, expectations for both Canada and the US are at their survey lows). . . Salaries/wages are expected to rise 2.9% over the next year, with Financial Services highest at 3.6% and all other industries 2% or above. Nearly two-thirds of CFOs cite rising pay for highly-skilled staff. Just under half expect gains at managerial-levels, and 44% expect gains for lower-skilled staff. The US is highest for all levels.
The point is not that everything in the U.S. labor market is hunky-dory. But Mr. Rose’s research has two key takeaways: First, not all workers are doing as badly as is often presumed. Second, if one agrees with the Fed’s position that the PCE price index is the best inflation measure to use, then workers haven’t done nearly so bad.
Policymakers often consider temporarily redistributing income from rich to poor households to stimulate the economy. This is based in part on the idea that poor households spend a larger share of their income than rich ones do. However, ample evidence suggests that the difference in spending between these groups is significantly smaller than commonly assumed. A second assumption is that redistribution through policy is more efficient than through capital markets. Whether this is true is important to consider when proposing this type of stimulus policy.
Wages for the typical worker in California — those who earn $19.18 an hour, or about $39,800 a year — are still 1.8% lower than they were in 2011, when the state’s unemployment rate hovered around 11.5%. The current unemployment rate is 6.4%
One point the report makes is worth considering for policymakers elsewhere in the United States. While labor organizers around the country along with most major Democratic politicians have said the federal minimum wage is too low, it seems clearly too high in Puerto Rico, at 77 percent of per capita income. That puts a lot of people with less education and fewer skills out of consideration for a job.
Authors Bart Hobijn and Alexander Nussbacher write “there is evidence that differences in propensities to consume this additional income across households are smaller than commonly assumed.” What’s more, the ability to borrow is important, and can “provide the opportunity for lower-income households to smooth their consumption and maintain it at an acceptable level even when their incomes decline, thereby providing an alternative source of economic stimulus,” they said.
Los Angeles County Supervisor Sheila Kuehl said Monday that she intends to propose a minimum wage increase for county workers and businesses in unincorporated areas that mirrors the plan recently approved by the city of Los Angeles.
But for some partisans on each side of the debate, that historic moment has been tainted by labor leaders’ last-minute push for an exemption for unionized workplaces. The request for a union waiver — proposed and then abruptly shelved — drew national attention, much of it negative, to the county Federation of Labor and its recently installed top executive, Rusty Hicks.
The Fed’s finding: “Currently, a little over a million workers are paid the federal minimum wage, and most of them are not employed full-time.” In addition, “A little less than a million workers are paid less than the federal minimum wage, a large majority of whom are employed full-time.”
Education reform groups worried aloud that without strong direction from Sacramento, unions, particularly the California Teachers Association, would exert their influence on local school boards to claim much of the new money for salary increases.