Wages, Obama Economy’s Weakest Link, Now Surging Under Trump | Stock News & Stock Market Analysis

Getting Paid: Even as the economy continued its modest recovery in recent years, there was one critical missing element: wages. Despite unemployment declines, wage gains remained tame. Thankfully, that’s now coming to an end.

XA new survey out by the National Association of Business Economics finds that companies are starting to boost pay for their workers in order to attract and keep productive, skilled employees in a tighter labor market.

That adds to mounting anecdotal evidence of a wave of pay raises, bonuses and new investments by major corporations fueled by the passage of Trump’s tax cuts in December — evidence of a surge in economic growth.

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Almost half — 48% — of the NABE survey of 119 of its member companies said that their wage and salary packages had increased during the last three months, while none reported reducing pay for workers.

That difference of 48 percentage points is the highest since January 2000 and third-highest since the survey started in 1982.

It doesn’t stop there, however. Over the next three months, “the (index) for expected wage costs increased from 46 in the October survey to 58 in January — the highest level since
this question was added to the survey in April 2014,” the NABE survey said.

So, in short, wages are starting to rise fast, a trend that is expected to continue, as companies invest more, add jobs and look for qualified workers to do them.

The widely followed tally by Americans for Tax Reform of companies either raising pay or handing out big bonuses following December’s tax cuts now stands at 275 — and rising.

Companies as diverse as Apple and Wal-Mart are adding to the pay packets of their workers, in some cases making pending minimum-wage hikes moot, as in the case of Wal-Mart. Some three million workers have already seen a hike in pay, a bonus or more money added to their 401(k), the first sweet fruit of the tax cuts.

Why are companies doing it? Not to be nice. No, the real reason is that, in what’s expected to be a fast-growing economy, they want to retain their best workers.

But they’re not only raising pay, they’re also investing in their workers. In the NABE survey, companies that have trouble hiring enough qualified workers say they’re “training (workers) internally” (31% of respondents) and “raising pay” (29%) in response to market pressures.

Both are great news for American workers, who will emerge from this expansion with higher pay, more skills and, hopefully, better job security than following the last two recessions.

And despite fears of a robotized army taking over America’s workforce, just 22% of the companies reported that they had “invested in automation” to make up for a lack in skilled workers.

Since the 2008-2009 recession, wage growth for workers has been stuck at 2.5% or lower — compared to a 3%-plus growth rate for wages before the financial crisis.

It’s not surprising this should be so: The economy failed to grow by more than 3% in any year during the Obama era, despite massive stimulus of nearly a trillion dollars and record-low zero-percent interest rates engineered by a desperate Fed.

The average annualized growth of the Obama years was actually less than 2%, the worst performance since the Great Depression.

This year, if the NABE survey is right, that dismal performance may be a thing of the past.

Some 16% of  survey participants predicted growth of over 3.1% this year. That’s up sharply from just last July, when only 2% thought growth would exceed 3.1%.

Even as NABE released its survey, another company announced a major investment in the U.S. that would result in “thousands” of jobs.

Thanks to President Trump’s oil-friendly policies, deregulation and tax cuts, Exxon-Mobil announced on Monday it would invest $50 billion in the U.S. in the coming years.

“Several companies have announced plans to invest here at home, partly as a result of tax reform, which among other things reduced one of the highest corporate tax rates in the developed world,” Exxon CEO Darren Woods wrote in a blog post. “These positive developments will mean more jobs and economic expansion across the United States in a myriad of industries.”

Is there any downside to all this giddy, good news? Only in that the Federal Reserve suddenly might get the idea that more people finding work and earning more causes inflation, part of the faulty Keynesian model that has guided the nation’s central bank since the Depression era.

We know that the Fed’s trying to return to “normal” on interest rates, which is all well and good. It plans three to four quarter-point rate hikes this year to that end.

But we would admonish them not to go too far and once again wreck the economy. After all, we’re only now emerging from the wreckage of their last mistake.


Corporate Tax Cuts Are Great For Companies, But They’re Even Better For Workers

With Incomes At Record High, Is Post-Financial Crisis Malaise Finally Over?

Don’t Wait For The Trump Boom — It’s Already Here 

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Originally posted 2018-01-30 08:02:58.


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