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Why There Is No Wage Growth In America

Over the past 2 years the Obama administration has been desperate to boost minimum wages, usually over tedious bickering with republicans and corporations who have resisted such an increase, with neither party realizing that such a measure would not do much to actually boost aggregate spending. Instead, what Obama should have been focusing on was to limit the maximum number of hours worked per week, because as the following chart shows, the reason why weekly pay is rising and aggregate earnings is not due to an increase in hourly wages but because Americans are simply working longer hours every week: not quality but quantity.

 

What this means is that we can start the countdown to the next executive order which will make it illegal for any full time worker to work over 40 hours. Of course, none of that will do much since corporations have long since figured out how to eradicate the quantity problem, and increasingly American workers limited to 29.5 hours or less so their employers can avoid spending ridiculous amount of money on Obamacare.

In fact, as we have shown, over the past half year, non-supervisory workers, those who are not bosses or in any leadership positions, have seen the growth in their hourly earnings tumble...

... even as those of their bosses - naturally - has soared!

 

Meanwhile, as we showed earlier this week in "Home What A Permabull Thinks Is The Biggest Threat To The Stock Market", the main reason behind America's depressed economy is that its workers, scrambling to achieve higher wages, and yet distracted by a countless number of iGizmos and numerous other reasons, have suffered an unprecedented collapse in productivity to never before seen levels.

 

And what all of the above goes back to, is one simple thing: an unprecedented amount of labor slack in the work force as can be seen by the following chart not of the unemployment rate, which can easily be manipulated and fudged by adjusting the number of Americans not in the labor force, but by the ratio of civilian employment to the total US population. This, clearly, is at depressionary levels.

 

Good luck with those rate hikes dear Janet Yellen...

The bottom line culprit: a record 92.9 million Americans not in the labor force. Until this primary problem plaguing the US economy is fixed, nothing else can be.