Re: Fwd: 1970’s redux and where do we go from here?
tfast wrote:
I would want to add that all the analyses of Chinese labour markets that I have read argue that, given the skill profile of employment in China, Chinese manufacturers face an almost infinite supply curve for the forseable future even at present growth rates. From this it would be hard to argue that market mechanisms are likely to produce any kind of a wage and thus inflation spiral in China.
But the biz press is full of reports of labor shortages in China - esp of skilled labor - with wages and other inducements rising.
To Doug’s sanguine interpretation I would want to argue that near full employment can induce a wage spiral sans any upsurge in union millitancy or deepening of density.
A cyclical one, yes; a structural one, like in the 1970s, I doubt it.
That said, however, we are just not seeing, in Canada or the US, any sign that this so-called blistering hot job market is pushing wage gains ahead of inflation or productivity increases which is quite a different story then in the 1970s.
A strange thing is going on in the US now - average earnings are flat, but there’s quite an acceleration at the high end. So, for example, average weekly eranings for production workers (80% of the private sector workforce) were up 2.9% in the third quarter of 2005 according to the monthly establishment survey, but the just-released estimate in the county wage and employment series, which includes managerial pay and bonuses that aren’t in the monthly survey, was up 6.1%. This comports with anecdotal evidence about shortages of skilled workers.
Doug