This last month of February showed solid job growth and the unemployment
rate unchanged. According to the labor department’s
survey of households, the American workforce grew by 555,000 people. The most
it has rose in 16 years. With the baby
boomer recession coming to an end, it is looking like the labor force is
pointed back in the right direction and people are looking, and securing a job
are rising. But with more people getting jobs has also caused problems with
wages. Wages are still considered low
and are not rising fast. The fed have to
make a decision on whether or not raise interest rates. If they believe it will
stay solid then it makes sense to raise them quickly.
It is definitely nice to see that the work force is growing, and that more jobs are being offered to the American people. It will be interesting to see tho how the FED will response to these low wages because their plan in slowing rising interest rates were not as good as forecast the last time they did it. The FED will have to make an important decision because wages can not stay as low as they are for the workforce.
ReplyDeleteThis article is interesting and definitely relates to the idea of "sticky" prices in the short run economy that we are currently discussing. Unlike the long run economy where prices are flexible and money is neutral, in the short run, prices are very unlikely to move. This can definitely be frustrating for laborers because they may feel as if they deserve a higher wage. Furthermore, in a tight labor market like we are currently experiencing where the unemployment rate is relatively low (near the natural rate) it would make sense for employers to raise workers in order to entice possible employees.
ReplyDeleteFor what reason is the FED under pressure to raise interest rates? If prices are sticky in the short run as discussed, increased interest rates will only lower investment, and subsequently, slow down the rate at which the labor force is securing jobs. IF the goal is to increase wages, the fed will have to do more than just raise interest rates.
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