Justin Lahart

speaker

1,185 appearances 22 recordings 1 series first heard Jul 2017 last heard Dec 2024

Justin Lahart’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Worker Pay Is Rising, But Their Piece of the Pie Is Shrinking · 8 Feb 2023 podcast

And then, you know, in turn, people will want even higher rate wages to deal with that increased inflation.

And you get to this sort of wage inflation spiral.

So that's sort of the worst case scenario.

Right.

So that's why the Fed is raising rates in order to cool down inflation.

Inflation has been cooling down.

It's not cool enough yet, but it's starting to cool down.

But the job market is just incredibly strong, as we saw with last Friday's employment report.

So the concern there is that because the job market is strong, because unemployment is low, that workers will have a lot of bargaining power, that it'll drive up wage costs.

Yeah, so the Fed has an inflation target.

It wants its measure of inflation to generally go up by about 2% a year.

But there's more to it than that.

The other thing that happens is productivity.

So if I'm more efficient as a worker and I produce more in an hour,

then I should get more money for that as my efficiency goes up along with whatever I need to keep up with inflation.

So there's this idea that productivity plus whatever inflation rate you want should equal wage gains.

He wants the workers' wages to go up by more than 2%.

What he and everyone else hopes is that productivity can increase, but they're not going to count on that.

The basic idea here is that wages equal productivity gains plus inflation.

So, for example, if a factory's workers boost their output per hour by 3% and the factory's owner increases prices by 2%, then the workers' wages can go up around 5% without any change to the labor costs as a share of the owner's revenue, right?

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