Prof. Mark THOMA - New Economic Thinking is Needed to Stop Charlatans Like Trump

After the positive employment report last week, we are hearing that faster wage growth may be “around the corner.” This is not the first time this hope has been raised, but workers have not yet realized significant gains. Will this time be different? The average hourly wage is up 2.6 percent relative to a year ago, and there are some signs of wage acceleration in recent months. However, part of the increase appears to be a shift from health care benefits to wages so the gains up to this point have not been as large as statistics on wage growth alone suggest.

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If there is acceleration in wage growth that is not offset by a further decline in benefits, it would certainly be a welcome change from the wage stagnation and rising inequality that workers have experienced in recent decades. But faster wage growth won’t solve the problem of rising inequality on its own.

Economists have identified many potential reasons for rising inequality, but there is no universally agreed upon set of causes. However, inequities in the distribution of income, an unfair distribution of the costs of technological change and globalization, and a political environment that supports wealthy business interests over the interests of the working class appear to be important factors.​

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