U.S. Employment Outlook: Solving the Wage Puzzle (Moody’s Analytics with Ryan Sweet)

The U.S. labor market has tightened, but wage growth remains mediocre at best. One hypothesis which has gained some traction blames pent-up wage deflation—the hypothesis that firms could not cut nominal wages by as much as they wanted during the recession, and are thus reluctant to raise wages now. This 2014 analysis suggests pent-up wage deflation is unlikely.

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