BREAKING: Paying Employees Might Help The Recovery
From the National Bureau of Economic Research:
Yes, lots of problems remain. But the economic declinists are willfully turning a blind eye to some pretty important and fundamental shifts in the U.S. over the last several years… Government assistance, the impulse toward regeneration, and a rapidly growing global economy have brought the U.S. a great distance in the past four years. But if the economy is going to enjoy another 48 months of growth, the private sector will have to do its part.
The next form of stimulus — the only remaining form of stimulus – will have to come from companies. We don’t need America’s bosses to do anything radical like double the wages of their employees, as Henry Ford did nearly a century ago. They just have to rechannel a portion of the cash earmarked for dividends, stock buybacks, and executive compensation into paychecks.
Nothing radical, though.
I disagree with this description. If anything, the private sector has been doing most of the heavy lifting for the recovery. Of course, it would be nice to see more wage growth (and it would help the recovery immensely), but the lack of wage growth is not a recovery-specific thing. It has happened in the prior recoveries in 1991, 2001 as well as today (though wage growth DID occur a bit more during the Clinton Administration).
The biggest drawback at the moment (and it has been throughout the recovery) is the lack of public sector job growth. Not only lack of growth, but shrinkage (I was in the pool!):
If you had normal trend public employment growth, the unemployment rate would be substantially lower, potentially below 7%.