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Wage inflation is occurring, just not here in the U.S. - we're importing it. In places where we have offshored manufacturing and business support functions. China is a good example - there's been spate of recent articles on rising wages in China. Vietnam is touted as the "new China", but cannot replace it - population is only 85 million. Latin America and Africa do not look like the new China/ new Asia either right now. Latin America has gone populist in last 8 years and large parts of Africa are still basically tribal societies, spread across many weak nation-states.
Will we get wage inflation in the U.S.? Ultimately - maybe; outcome is political, as EJ says. But our current Powers That Be will fight it tooth and nail before it happens, as they have done for the last 35 years.
From today's Financial Times of London:
"The emerging markets will export inflation across the globe
By John Plender
Unions are weak, which means that comparisons with the stagflation of the 1970s are inexact. An economic slowdown in the US, Japan and Europe this year and next will create spare capacity and cause unemployment to rise, thereby limiting wage pressure and taking pressure off the oil price.
This argument is seductive but wrongheaded...Today, what happened in the developed world in the 1970s is happening in the emerging markets, which are now a much weightier chunk of the global economy...
Energy and food take much more of workers' incomes in emerging markets than in the developed world. So the message in the food price riots is that these workers will soon be fighting for much higher wages.
This process has now gone global. Emerging market workers are battling for their income share. So the developed world will have to pay more for its imports.
"
Will we get wage inflation in the U.S.? Ultimately - maybe; outcome is political, as EJ says. But our current Powers That Be will fight it tooth and nail before it happens, as they have done for the last 35 years.
From today's Financial Times of London:
"The emerging markets will export inflation across the globe
By John Plender
Unions are weak, which means that comparisons with the stagflation of the 1970s are inexact. An economic slowdown in the US, Japan and Europe this year and next will create spare capacity and cause unemployment to rise, thereby limiting wage pressure and taking pressure off the oil price.
This argument is seductive but wrongheaded...Today, what happened in the developed world in the 1970s is happening in the emerging markets, which are now a much weightier chunk of the global economy...
Energy and food take much more of workers' incomes in emerging markets than in the developed world. So the message in the food price riots is that these workers will soon be fighting for much higher wages.
This process has now gone global. Emerging market workers are battling for their income share. So the developed world will have to pay more for its imports.
"