Achieving such diversity is fairly easy when companies are able to pay big nominal wage increases.
With surprisingly low inflation, the argument goes, workers were content with low nominal wage increases.
If inflation remains low for an extended period, workers' resistance to nominal wage cuts might fade.
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Nominal wage gains of 3.7% for production workers were offset by surges in energy and food prices.
And since it is hard to cut nominal wage rates, price stability could put a floor beneath real wages.
Given a constant money supply, nominal wage rates fall, but real wage rates rise because total output has gone up.
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At the same time, both inflation and nominal wage growth have been higher than in other euro members, especially Germany.
Similarly, because most wages are denominated in dollars and workers resist nominal wage cuts, deflation can force employers to lay off employees.
This suggests that concerns about nominal wage rigidities can be overdone.
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In contrast, if prices are falling by 2 percent, then the same 2 percent real wage cut translates to a nominal wage cut of 4 percent.
Nominal wage cuts, however, are extremely difficult to agree.
Since the adjustment of the covered earnings ceiling depends on nominal wage growth, if inflation takes off or if real wages grow even more rapidly, the covered earnings ceiling will grow at an even faster pace.
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Apart from some die-hard New Classical economists, and the odd Rothbardian, everyone appreciates the difficulty of achieving such downward absolute cuts in nominal wage rates as may be called for to restore employment following an absolute decline in NGDP.
Nominal wage inflation remains very low, as companies sit on vast piles of cash but remain reluctant to spend, and there is still a large amount of slack in the U.S. economy, particularly given a stubbornly high rate of unemployment stuck at 9%.
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Equal emphasis should be put on public-sector adjustment and nominal-wage reduction in the private sector.
If the Fed continues to keep a lid on the growth of nominal incomes, slow wage growth may eventually bring real wages down to a level required for full employment.
Weak wage growth is permeating the labor market from virtually all sides: Nominal hourly wages are growing slower than before the recession, the real value of wages has fallen over the past year, new job creation is skewing to lower-paying jobs and wages for new and returning entrants in the workforce are declining.
Some argue that wage-cuts could not happen, so that incomes would not fall in nominal terms.
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And the fact that his nominal (face value) covered earnings is being compared with my earnings up through 60, albeit indexed by wage growth through age 60, means that I and everyone else in my boat that earns above the ceiling can benefit, potentially big time, from working very late in life.
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