This Great Graphic comes from the Wall Street Journal. It shows what is happening to the pay of the least compensated in the US. Their pay is going up at a pace that is exceeding the averages and inflation.
The data is from Q2 16. Weekly wages for full-time employees in the 25th percentile, earning about $13 an hour, are up about 3.1% from a year ago. The Labor Department data show that this is the largest increase since 2009. The pace of increase exceed the pay of median workers who make about $20 an hour for full-time work.
While many companies who are giving their lowest paid workers raises are broadcasting it widely and loudly, they seem to have barely re-discovered good business practices that Henry Ford found more than 100 years ago. Reports suggest that employee turnover at call centers has dropped and employee satisfaction surveys show improvement. There are reports showing lower employee turnover and a decline in hiring and training costs.
Alan Krueger, a former Obama adviser, was quoted in the WSJ arguing that the pay increases was a "hint" of a corporate shift toward more profit-sharing. This seems a bit of an optimistic read. However, more compellingly, he argues that the pay increases show that "wage policy is not fully dictated by the market." A strictly market-driven approaches would set different wages in different cities. There would be no national wage policy.
Since 2014, WSJ reports, 26 states have raised minimum wage, as have many cities. The federal minimum wage has been at $7.25 for seven years and counting.
This is consistent with our macro call for a continued increase in US price pressures. Our argument sits on three legs: rents, medical services, and wages. We anticipate one hike this year, and are penciling in two for next year.
Opinions expressed are solely of the author’s, based on current market conditions, and are subject to change without notice. These opinions are not intended to predict or guarantee the future performance of any currencies or markets. This material is for informational purposes only and should not be construed as research or as investment, legal or tax advice, nor should it be considered information sufficient upon which to base an investment decision. Further, this communication should not be deemed as a recommendation to invest or not to invest in any country or to undertake any specific position or transaction in any currency. There are risks associated with foreign currency investing, including but not limited to the use of leverage, which may accelerate the velocity of potential losses. Foreign currencies are subject to rapid price fluctuations due to adverse political, social and economic developments. These risks are greater for currencies in emerging markets than for those in more developed countries. Foreign currency transactions may not be suitable for all investors, depending on their financial sophistication and investment objectives. You should seek the services of an appropriate professional in connection with such matters. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete in its accuracy and cannot be guaranteed.
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