Thursday, July 15, 2010

To increase real wages

From a widespread perspective, real wages are impacted by multiple factors. the major ones usually are: money supply, inflation, labor pool size, and jobs available. During the last four decades, it is undeniable that the labor pool size has been increasing, and it had been meeting or exceeding the jobs available which would be a down pressure on real wage. However, the money supply has been increasing, often artificially, which allowed employers to pay more unadjusted for inflation, but it has been empirically proven that rising wages leads to rising inflation which often keeps real wages down and devastatingly so if inflation is too high. However, since Reagan's big government spending, foreign purchase of US debt has been counterbalancing the downward pressure on wages by keeping inflation relatively low. It is easy to blame the "rich", but wealth disparity is the symptom of all these factors. There are two way to drive real wages up in this environment and decrease wealth disparity. The first would be to decrease the labor pool and the second would be to increase the number of jobs. This is all done while keeping the money supply from increasing rapidly to drive inflation.

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