Why Aren’t More People Looking at Nominal Wage Growth?

One thing I simply do not understand at all: a 2%/year inflation target ought to be more-or-less the same thing as a 4%/year nominal wage growth target. That has to be so, by arithmetic–unless, of course, you are envisioning still-further widening of the income distribution and a still-further upward leap in income inequality.

So why doesn’t the fact that nominal wage growth has been stuck at 2%/year since the collapse of the housing bubble lead everyone to conclude that monetary policy is too tight?

It is a great mystery to me, one of many..

Kevin Drum: There’s Still No Wage Pressure in the US Economy | Mother Jones: “This is just a reminder from Jared Bernstein…

…who analyzed five different measures of wage growth to produce the chart below. Ever since the end of the Great Recession, wage growth has been under 2 percent. It’s still under 2 percent, and shows no signs of increasing. This is yet another indication that the recovery is weak, the labor market has a lot of slack, and there’s no inflation in sight…