Interesting report I just found on MSNBC:

Global wages falling this year, UN says

‘The picture on wages is likely to get worse,’ UN report predictsThe Associated Pressupdated 7:07 a.m. MT, Tues., Nov . 3, 2009

GENEVA - Real wages fell in the United States and some other wealthy nations in the second quarter of the year, raising questions about whether workers are sharing in any economic recovery, the U.N. labor agency said Tuesday.

The International Labor Organization said inflation-adjusted wage growth fell sharply around the world last year to 1.4 percent, from 4.3 percent in 2007. It said wages are falling in a number of countries so far this year.

"The picture on wages is likely to get worse in 2009, despite the beginning of a possible economic recovery," the 15-page report said.

The ILO analyzed data from 35 countries including Brazil, Britain, Japan, South Africa and Ukraine. It did not specify where wages have fallen the most or the least, and China and India, which provide large amounts of the world's workers, were excluded from the report because they did not provide data.

Monthly wages have fallen almost 2 percent in the United States since January, said Patrick Belser, an ILO economist.

Manuela Tomei, ILO's employment chief, said wage declines were depriving national economies of much needed demand and were contributing to sapping consumer confidence.

"The continued deterioration of real wages worldwide raises serious questions about the true extent of an economic recovery, especially if government rescue packages are phased out too early," Tomei said.

The ILO noted some good efforts by governments to help workers, citing minimum wage increases above inflation in the United States, Brazil, Japan and Russia.

"In the U.S., there is a real policy toward strengthening the wage policies," Belser said, adding that Washington was trying to make it easier for workers to join unions.

"These measures can go a long way in addressing the imbalance that we found before the crisis, particularly with zero growth in the median wages in the U.S. for many years despite a booming economy," he said.

LeRoy: I thought this might attract some interesting commentary from Bottom-Liners.

of economics. We'll see if returns to Capital hold up.

For Labor, you ain't seen nuthin' yet in USA.

Wages are measured for the employed. With unemployment, Labor's share is down another 9% or so in USA in last 18 months.

A lot has to do with China.

Then tack on inflation and low rates to savers and the "little people" are falling about 10% per year -- up from around 5% a year since W. Plus, they have to pay taxes (Helmsley).

I can't figure out why economystics keep on praying for govts to print more money. Didn't they learn anything else in school?

There is very little real high end labor capable of drawing competitive wages, the medical trade in India shows that even surgery is becoming a commodity.

And as employment becomes higher you, of course, have the whole supply demand thing on labor, people are willing to work for less and business can find better workers cheaper. As mentioned it is a difficult spiral in that lower wages mean lower buying power, which means lower demand, which means price pressure, which means lower profit, which means less desire to extend raises.

If countries are going to buck this trend they need some sort of cash cow to fund a means of either caring for the unemployable so some demand can be salvaged or investing in things that employ the skilled but underemployed. These countries need to be export competitive, or have high demand commodities, or as is the case of the U.S., (for the time behing be able to borrow freely.

Unionization is great if it is widespread enough. It offers some chance to maintain wage levels in the face of a poor demand supply situation of labor. A pity though however that unization can also cause some unfortunate and excessive costs, like overly generous pension benefits.

"The continued deterioration of real wages worldwide raises serious questions about the true extent of an economic recovery, especially if government rescue packages are phased out too early," Tomei said.

Excuse me, but when I read "government rescue packages", my first thoughts are of the trillions of dollars in Wall Street bailouts. I'm sure this is not what Tomei meant? But how can government rescues create real demand for workers? If GM is going out of business because no one wants to buy their crappy cars, is government going to help them redesign better ones?

I keep telling you that all the economists preach is that govts should print more money. Krugman was intent on this Monday, as I recall. It "hit me" last night that all Keynesian economics boils down to is that money has to be printed up during slumps.

I keep telling everyone all the time that this slump will not yield to mere printing. Helicopter Bennie is exactly the WRONG man now; Greenspan was too.

They are printers.

The Fed requires Volcker. Stiglitz might help. I myself know others, but they are actuaries.

Solutions involve VAT, industrial-defense policy, taxation, govt waste, pensions, interest-rates, medical prices and practices and OTC-products, firing BLS and Commerce Dept, Chinese wages & money, energy, electronics-mfg, local govt idiocy, etc.

BO turned out to be a silver-tongued incompetent.

Didn't you read Roubini's warning of the consequences of a prolonged period of zero interest rates? Another massive asset bubble just waiting to burst...The Austrian economists would also argue vehemently against our current wildly expansionary monetary and fiscal policies. I agree with them on the monetary issue while disagreeing on the fiscal issue. Being fundamentalist libertarians, the Austrians do not want ANY government involvement in the economy...at all.

Sovereign: It "hit me" last night that all Keynesian economics boils down to is that money has to be printed up during slumps.

LeRoy: Keynes actually had a strong preference for activist FISCAL policy during economic slumps. He would have the government spending more on infrastructure projects....and perhaps on R&D, though Keynes did not really have a modern understanding of the importance of research and development. He would not have wanted the Fed to slam on the brakes during a massive slump like this, but I get little from reading his stuff that he would have wanted them to open the floodgates, either. But I agree with you that this slump "will not yield to mere printing". In fact, I think our current monetary policies are creating a massive carry trade in the US dollar that will ultimately result in a rapid fall in the value of the dollar, with potentially catastrophic consequences for not just the U.S. economy, but the world economy as a whole. That was the point of Roubini's warning.

Almost all. Probably all of those deemed suitable by NYT (Temple of Mainstreamism as endowed by landlords supporting universities).

Roubini is treated as a semi-crackhead by NYT. Surprisingly, Charlie Rose has him on.

Roubini's "minus 20%" seemed to me to be the recent dollar/euro loss.

"Asset bubble waiting to burst" sounds to me to be stocks in Roubini's lexicon. While SOME interest rates are very low, they don't apply universally. I've written that the crazed interest-rates are worsening USA unemployment. I'm not clear about which assets would burst. Stocks now depend on global earnings, investors, and sales.

Assets??? I guess they will fall as always with rising interest if it exceeds inflation and earnings. But art-masterpieces are not subject. However, shopping centers for Tionesha Chitlins are gonna burn baby burn, along with Clint Whitbread's.

The Euro/dollar loss and the true interest rate are separated by one level of differentiation. I wouldn't think that could be the answer.

Tionesha Chitlin? Clint Whitbread? Huh??

I don't think that increased deficits and increased government spending are joined at the hip. Although tax increases are more often suggested to soak up loose money during inflationary periods, I think that judicious reshaping of the tax curve allows taxes to be used when the economy is either overheated or tepid. I can't help thinking that Keanes must have noticed that too.

You bought euros with borrowed dollars and made 20%.

Your tax idea is from Abba Lerner, called "Functional Finance." Keynes was focused more on moving excess savings toward investment and poor-relief.

"Inflation is everywhere and always a monetary phenomenon". So said Milton Friedman. Bernanke is a money printer, but he is doing the bidding of the politicians, who would rather hand out debased coin than redistribute the ill-gotten wealth of the upper classes. Since the upper classes have seized control of the politicians, we should expect an inflationary approach. The wealthy have learned very well how to profit from inflation.

I agree.

But contentions (your) that USA now has moderate deflation are laughable. Look at healthcaresurance, college, good meats, etc. They are 30% of GDP and inflating 5-15% yearly. Here in NYC rents and houses are up too.

Yes. For the 30% of USA in or near Depression, there's a very minor price fall, esp in dark-skinned real-estate but not in their foods or sneakers or movies.

Bad pizzas seem to offer specials, but at decent places, and bagel-stores, prices are escalating.

Let the wogs eat frankenfoods. The wogs, meaning the proles (of any color) are way more numerous than the folks who can still afford gourmet, and hence, have a greater impact on the CPI. If 100 proles are hurting and can't afford to pay the old prices, they will be rewarded with lower prices on their junk. 10 yuppies can pay more and still the food CPI would drop.

Sovereign: It "hit me" last night that all Keynesian economics boils down to is that money has to be printed up during slumps.

LeRoy: My original reply to this post must have been written when I was very tired. Because this is really not even a close approximation to what 'Keynesian economics boils down to'. Keynes, living during the 1930s, was deeply aware that at some times, during especially deep economic slumps, monetary policy (i.e., printing more money) becomes singularly ineffective. The economy gets stuck in what has become known as a 'Keynesian liquidity trap'. There is not much question that we are in a Keynesian liquidity trap right now, and have been since September of last year. Print more money, and the banks are simply sitting on it. They are not lending it out, because the banks are scared. And very few consumers want to borrow, in any event, because consumers are scared, too. A day or two ago, The Wall Street Journal reported that many corporations are sitting on big piles of cash. They are hoarding their accumulated earnings, because they, too, are scared. In such a situation, 'printing more money' simply doesn't work. So why would Keynes have advocated it? In fact, he didn't. His central argument, the central thrust of Keynesianism, is that in such circumstances, fiscal policy is the only way out of a depressed economic situation.

Which, indeed, is probably correct.

Krugman on Monday wrote about actions that go beyond borrowing. He wasn't focused on savings exceeding investment.

Little of economics prescribes how much money govt should print-up in good times and bad -- nor on how the printing should mesh with borrowing. Friedman tried to under-respect borrowing; Keynes didn't go much into printing or its limits.

I just see today's Keynesians as under-concerned with the consequences of printing and painting themselves into a corner where their policies amount to merely printing. They do that because their "true-religion" worships Free-Trade. They don't even think twice about where the money will be borrowed from. As a result, they have thwarted interest-rate dynamics while they pilot the Helicopters near Wall St.

Phil, you have to Google "Roubini Economonitor." Read Nov 4 & 2.

Masterful!

I was right about the minus-20%.

Funny. I just realized that Roubini looks like almost a photocopy of me sometimes.