While many celebrate nominal wage increases, there is reason to question whether aggregate wage growth actually benefits workers. Former treasury secretary Larry Summers and M-RCBG research fellow Alex Domash show that faster nominal wage growth above 4% is usually associated with slower real wage growth. They also argue that current wage growth implies sustained inflation above 5%, and that bringing down high wage growth usually requires a recession. Read the full post from Alex Domash and Larry Summers.
The relation between nominal and real wage growth
June 4th, 2022