Tag Archives: Wages

JoeBamanomics Report Card: U.S. Wages 1.2 Percent Lower Than Last Year, Black and Asian Women Hit Hardest

(Sundance) Well, well, well…. though financial media will say this is remarkably unexpected, it is something CTH specifically predicted we would see – and it is happening exactly on the timeline CTH anticipated.

The Bureau of Labor Statistics releases the second quarter national wage rate data today {BLS DATA HERE}.  U.S. wages DECLINED 1.2% in the second quarter of 2021 compared to last year.  When reviewing the data [Table 2], look at the negative impact to women, specifically Black and Asian women:

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Small Business Optimism Soars to Highest Level in 34 Years

Small business optimism soared in May to its highest level in 34 years, with some components hitting all-time highs, the National Federation of Independent Businesses said Tuesday.

The NFIB’s Small Business Optimism Index rose 3 points in May to a reading of 107.8, its second-highest level in 45 years and strongest level of the recovery. Economists were expecting the index to rise to 105.2 from 104.8.

The May reading was just under the 1983 record of 108.

Several measures hit the highest levels ever recorded. Plans for business expansion, reports of positive earnings trends, and compensation increases broke new records. Expectations for strong increases in sales reached their highest level since 1995.

“Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages,” said NFIB Chief Economist Bill Dunkelberg. “While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”

The NFIB cites tax cuts and regulatory cuts as helping drive the optimism of small businesses.

“The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy,” the NFIB said in its report. “Regulatory costs, as significant as taxes, are being reduced.”

Source: by John Carney | Breitbart

The Real Reason Our Wages Have Stagnated

Our Economy Is Optimized For Financialization

Labor’s share of the national income is in free fall as a direct result of the optimization of financialization.

The Achilles Heel of our socio-economic system is the secular stagnation of earned income, i.e. wages and salaries.
 Stagnating wages undermine every aspect of our economy: consumption, credit, taxation and perhaps most importantly, the unspoken social contract that the benefits of productivity and increasing wealth will be distributed widely, if not fairly.
This chart shows that labor’s declining share of the national income is not a recent problem, but a 45-year trend: despite occasional counter-trend blips, labor (that is, earnings from labor/ employment) has seen its share of the economy plummet regardless of the political or economic environment.
https://i0.wp.com/www.oftwominds.com/photos2015/wages-GDP9-15.png
Given the gravity of the consequences of this trend, mainstream economists have been struggling to explain it, as a means of eventually reversing it. The explanations include automation, globalization/ offshoring, the high cost of housing, a decline of corporate competition (i.e. the dominance of cartels and quasi-monopolies), a failure of our educational complex to keep pace, stagnating gains in productivity, and so on. Each of these dynamics may well exacerbate the trend, but they all dodge the dominant driver of wage stagnation and rise income-wealth inequality: our economy is optimized for financialization, not labor/earned income.
What does our economy, is optimized for financialization mean? It means that capital and profits flow to the scarcities created by asymmetric access to information, leverage and cheap credit–the engines of financialization.

Optimization is a complex overlay of dynamically linked systems:
 the central bank optimizes the flow of cheap credit to the banking/financial sector, the central state tacitly approves the consolidation of cartels and quasi-monopolies, and gives monstrous tax breaks to corporations even as it jacks up taxes and fees on wage earners and small business.
Financialization funnels the economy’s rewards to those with access to opaque financial processes and information flows, cheap central bank credit and private banking leverage. Together, these enable financiers and corporations to get the borrowed capital needed to acquire and consolidate the productive assets of the economy, and commoditize those productive assets, i.e. turn them into financial instruments that can be bought and sold on the global marketplace.

These commoditized assets include home mortgages, student loans, and specialized labor forces
 which are “sold” with their employers or arbitraged globally. Once an asset is commoditized, the profits flow to those who process the transactions of packaging and marketing these assets globally.

Take auto loans as an example:
 the big money isn’t made from collecting the interest on the auto loans; the big money is made by processing and assembling the loans into tranches that can be sold to investors globally.

One way of understanding financialization is to ask: what’s the quickest, easiest way to make $10 million in our economy?
 Is it building a business based on the labor of employees over a decade or two?

You’re joking, right?
 The easiest way to make $10 million is to be part of the investment banking team overseeing a $10 billion corporate buyout or merger deal, or investing seed money in a tech company that subsequently goes public.
How about the easiest and quickest way to make $100 million? The answer is the same: working a vein of financial wealth based on commoditized instruments, leverage and credit.

Labor’s share of the national income is in freefall as a direct result of the optimization of financialization.
 The money flows to those with the capital, credit and expertise to optimize financialized skims. As for selling one’s labor in an economy optimized for capital and the asymmetries of finance–there’s no premium for labor in such an economy, other than

technical/managerial skills required by finance to exploit markets.

This is the driver of the rising income-wealth inequality this chart reveals:
https://i0.wp.com/www.oftwominds.com/photos2017/income-percentage7-17a.png