A Different Kind Of Wage Inflation Heralds This Cycle’s End

By John Rubino – Re-Blogged From Dollar Collapse

Towards the end of long expansions (this one is the longest on record) things get tight. Factories operate flat-out and start raising prices. Good workers become harder to find and companies start competing for them with higher wages and other perks.

This story is about the “other perks” which, because they don’t show up in wages aren’t directly inflationary. But they do cost money, which means they shrink corporate profits nearly as much as would a big wage increase. From today’s Wall Street Journal:

Factories Tire of Wage Wars; Give Fridays Off, Spiff Up Bathrooms

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Does Government R&D Policy Mainly Benefit Scientists and Engineers?

By Larry Kummar – Re-Blogged From WUWT

Does this apply to Climate Science?

Paper By Austan Goolsbee

NBER Working Paper No. 6532, Issued in April 1998

Conventional wisdom holds that the social rate of return to R&D significantly exceeds the private rate of return and, therefore, R&D should be subsidized. In the U.S., the government has directly funded a large fraction of total R&D spending.

This paper shows that there is a serious problem with such government efforts to increase inventive activity. The majority of R&D spending is actually just salary payments for R&D workers. Their labor supply, however, is quite inelastic so when the government funds R&D, a significant fraction of the increased spending goes directly into higher wages. Using CPS data on wages of scientific personnel, this paper shows that government R&D spending raises wages significantly, particularly for scientists related to defense such as physicists and aeronautical engineers. Because of the higher wages, conventional estimates of the effectiveness of R&D policy may be 30 to 50% too high.

The results also imply that by altering the wages of scientists and engineers even for firms not receiving federal support, government funding directly crowds out private inventive activity.

Full paper here.

H/T Larry K of the FabiusMaximus website.

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New Study Drives a Stake Through the Gender Wage Gap Myth

Re-Blogged From Total Conservative

Harvard University researchers Valentin Bolotnyy and Natalia Emanuel have published a new study of the Massachusetts Bay Transportation Authority that could give us the best argument yet against the left-wing, feminist myth of the gender wage gap. In their groundbreaking work, the researchers found that while they did indeed find a wage disparity between men and women at the MBTA, this could be wholly explained by real-world factors that have absolutely nothing to do with sexism, either individually speaking or institutionalized.

“Female workers earn $0.89 on the male-worker dollar,” at the MBTA, reported the researchers in their paper. “The weekly earnings gap can be explained by the workplace choices that women and men make.”

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Why Are Wages So Low

By Keith Weiner – Re-Blogged From Gold Eagle

Last week, we talked about the capital consumed by Netflix—$8 billion to produce 700 shows. They’re spending more than two thirds of their gross revenue generating content. And this content has so little value, that a quarter of their audience would stop watching if Netflix adds ads (sorry, we couldn’t resist a little fun with the English language).

So it is with wry amusement that, this week, Keith heard an ad for an exclusive-to-Pandora series. The symptoms of falling-interest-disease are ubiquitous.

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Why Aren’t Widespread Labor Shortages Translating Into Roaring Wage Inflation?

By John Rubino – Re-Blogged From Dollar Collapse

Google “labor shortage” or “wage hikes” and the result is a picture of an overheating economy. Some examples from August 10:

Why Disneyland’s $15-an-hour labor deal is a win for workers everywhere

Colorado small businesses seek help with labor shortage

Washington growers struggle with labor shortage

Now hiring: teenagers (and anyone else willing to work)

You can’t read these headlines and not expect wages to climb dramatically as desperate companies pay what they have to in order to keep their customers happy. But the macro numbers tell a different story. Here’s the change in average hourly earnings over the past decade:

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Rising Wages = Shrinking Corporate Profit Margins … And Falling Stock Prices?

By John Rubino – Re-Blogged From Dollar Collapse

Today’s Wall Street Journal contains a couple of charts that illustrate a relationship that’s not getting much media attention these days: The fact that tightening labor markets are forcing companies to raise wages, in the process squeezing their own profit margins.

Historically this margin compression has been either a cause of or contributor to cyclical turning points — in other words it coincides with recessions and equity bear markets.

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Inflation Is Back: Maybe The Phillips Curve Was “Just Resting”

By John Rubino – Re-Blogged From Dollar Collapse

Economists have been struggling to explain how unemployment can fall to 4% without wages starting to accelerate. The following chart shows paychecks rising at about the rate of inflation over the past five years, which means the average worker’s earnings don’t buy much more now than in 2013.

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