Jobs up, wages after inflation down.
My word, I wonder what could possibly cause such a thing?
The claimant count fell by 41,700 last month,
The employment total rose by 155,000 in the three months to August
The headline jobless rate was unchanged at 7.7%
Wages rose by just 0.8% on an annual basis in the quarter, or just 0.6% in August, compared to inflation of 2.7%
Reaction to the jobs data floods in, with many experts focusing on the fact that wages (up 0.8% year on year in the last three months) are still lagging behind inflation:
Dear God! How can we explain this? What twisted corner of economics could possibly be used to provide the mechanism by which this happens?
Well, why not try Econ 101? Demand curves slope downwards perhaps? When things become relatively cheaper people buy more of them? As wages fall in real terms labour gets relatively cheaper therefore people employ more labour?
Could it be?
Of course, the problem for this explanation is that if it is true then so also must the corollary be true. That higher wages reduce employment. And the minimum and living wage campaigns will never agree with that. So, instead of being able to explain the world through our simple and correct economic theories we’re all left scratching our heads as to what the hell is going on.
Aren’t we lucky to have ideology trumping fact in our political discourse?