Central Banks Want to See Greater Wage Growth - BBH
Research Team at BBH, suggests that the Central banks in Japan, Europe, and the US want to see greater wage growth.
Key Quotes
“Despite near full employment in the US, UK, Germany, and Japan, wage growth remains low in absolute terms and about the historical experience (with comparable levels of unemployment). Corporate balance sheets are flush with cash. Many companies apparently cannot find sufficient investment opportunities, despite incredibly low interest rates, and instead, corporations are among the largest buyers shares (their own).
If businesses are not raising wages because no one can force them to, and as a society we need to boost demand, then the concession comes from the state. Among the successful programs of this sort in the US is the earned income tax credit, a refundable tax credit for low and mid-income families, especially with children. This is a state subsidy of employment. Some conservatives in the US, like the Nobel Prize winning economist Edmund Phelps argues to subsidize workers wages. A universal basic income could be one such form that a wage subsidy can take.
In effect what such schemes do is accept that businesses not longer have to provide sufficient wages to provide a livelihood for their employees. We understand livelihood to mean the cost of living including the cost of reproducing (someone of equal or higher skills). The state fills the gap between wages and one's livelihood. It would further serve to harden class relationships and antagonisms. A check is a poor replacement for the social qualities of work, the camaraderie, the satisfaction of doing a job well, recognition, and status. It would lead to more atomization of society and the weakening of social bonds and trust. Universal basic income is seductively dangerous.”
