From Jobless to Wageless – Stephen Roach

Fully 39 months since the last recession ended in November 2001 and the American job machine finally seems to be back in gear. Hiring gains are still not spectacular when judged against earlier cycles, but as underscored by the 262,000 gain in nonfarm business payrolls in February, they have certainly been on the upswing over the past year. Unfortunately, the quality of hiring remains decidedly subpar — dominated by those toiling at the low end of the pay spectrum. Moreover, an even bigger hole remains in the US labor market: Despite generally sharp increases in productivity since 1995, there has been no discernible pick-up in real wages. The character of America’s recovery has shifted from jobless to wageless — with profound implications for both the economy and financial markets.