So, we should think of the falling real wage in manufacturing as being fundamentally expansionary.
Real wage growth continued to be positive, though not as positive as it was in November.
But with inflation around 6.5% in 2011, real wage increases are just over 4%.
One likely reason is that workers' wage demands tend to be based on previous real wage rises plus inflation.
These are real wage rises by the way, real increases in purchasing power.
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Real wage growth was 2.6% yoy, forcing consumers to take on extra leverage.
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Given a constant money supply, nominal wage rates fall, but real wage rates rise because total output has gone up.
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Two other factors supporting the Mexican economy are strong real wage growth of 5% and low unemployment, officially just 3%.
Its true that no one wants their real wage to fall, but tight money will not solve the real wage problem.
The reason why is pretty basic: When we devalue we're actually lowering real wage rates, thus reducing the cost of hiring.
It also projects a steady decline in unemployment to around 5% and real wage growth of 1.4% a year or more.
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Single, low-skilled men therefore face a lower effective real wage than low-skilled women with children and have less incentive to work.
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Low paid workers have been most affected by this: for them, a doubling of unemployment means a real wage squeeze of 17%.
In the long run, real wage increases are determined by productivity growth.
The real wage increase is actually stunning, more than 22.1% in 2006.
By comparison, the real wage bill in the U.S. fell in January, February and March, according to the Bureau of Labor Statistics.
On a yearly basis, the real wage bill growth picked up further steam to 7.3%, from the recent 1.2% yearly low record back in October.
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.
"Unless inflation falls are matched by stronger pay growth, 2013 will be the fourth year in a row that people have suffered real wage cuts, " she said.
Mr King argues that workers (who are, naturally, also consumers) were virtually the sole beneficiaries of the new economy, in the shape of faster real wage growth.
Real wage growth moderated to 10.2 percent year over year (consensus was 11.2 percent), while the initial June data was revised down to 10.2 percent from 12.9 percent.
To sum up, I can easily accept that the American middle-class and southern Europe could be experiencing significant real wage declines as a result of real or structural factors.
Wages were thus deliberately repressed: there were some real wage cuts but the majority of that cut in unit labour costs came from the normal ongoing rise in productivity.
Wages before inflation accelerated to 14% year over year versus 12.5% year over year in May, which meant real wage growth rose to 4.2% yoy vs. 2.6% yoy in May.
But if productivity growth suddenly increases, workers are initially happy with the previous pace of real wage gains, so unit labour costs decline, allowing both unemployment and inflation to fall.
This is why some economists argue that a little bit of inflation, say 3%, is a useful lubricant for relative wage adjustment, because it makes it easier to disguise real wage cuts.
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Meanwhile, the real wage bill moved down by 0.1% in February and slowed down to 4.1% growth year over year from 5.3% growth year over year in January and a 6.4% wage hike in December.
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With these economies now squaring up to the prospect of an extended period of austerity measures and real wage cuts, it is inconceivable to see how the EZ can survive in its current form beyond 2013.
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Numerous studies have shown that when the real minimum wage is pushed above the prevailing market wage for unskilled workers, jobs are lost and others never created.
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The figure below shows the real hourly wage and hours worked by employees of the average small business as a fraction of their levels when the Great Recession began.
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