Still no sign of wage inflation

The improving labor market continues to show absolutely no sign of sparking any kind of dangerous inflation. Average hourly earnings fell by one cent in September relative to August, and compared to a year ago average hourly earnings are up by just 2 percent. The overall rate of inflation has been even lower than that, so these meager wage gains do constitute some kind of increase in workers’ living standards. But since productivity is also rising, this means wages are exerting no pressure on economy-wide inflation and there’s zero reason for the Federal Reserve to be worried about it.

Back in August, I offered five charts that prove its time workers got a raise and everything from that stands true today. It’s not obvious that the government has a ton of policy levers to force most workers to get a raise (though minimum wage hikes can help some workers), but the central bank ought to be at least offering a clear signal that it has no intention of bringing down tighter money until it sees some wage gains.