Please note my qualifier: "with the intention that" https://www.federalreserve.gov/faqs/economy_14400.htm relates to the Fed's rationale to target 2% inflation over time. https://www.federalreserve.gov/mone...longer-run-goals-monetary-policy-strategy.htm relates to the same topic from the viewpoint of the FOMC in 2020 --- this viewpoint can change from time to time. By going to the Fed's website you might find a more up to date FOMC statement. https://www.aei.org/articles/have-wages-stagnated-for-decades-in-the-us/ relates to my statement "...against a background of aggregate incomes rising over time at a similar rate. What I'm claiming is that over time rising wages more or less keep up with higher prices. (This depends somewhat on which particular deflator you use to convert nominal wage to real wage.) You can easily pick out shorter periods where the tracking isn't so close.) If real wages perfectly tracked inflation there would be no change in aggregate real wages over time. The actual figures show a real gain in wages of 18 cents an hour over fifty years which is pretty close tracking over that long time period, but of course the month to month and year to year tracking is not going to be so close. What we want to look at here is real wages and salaries over a long period. Why over a long period? It's because over shorter periods real wages fluctuate quite a bit and they tend to lag changes in inflation both when inflation is rising and when it is falling. For example in 1970 ave real hourly wage was ~26.75 this dipped to a low of ~21.75 in 1995 and back up to ~26.98 in 2022. Over fifty years, however, average real wages have netted just 0.18$ per hour difference.. (see the chart below) I have always considered that overtime wage increases keep up more or less with inflation with a lag of course. However the AEI article I linked to argues that if you use a more appropriate deflator, real wages have actually been more or less steadily rising over time. Either way we should look at inflation against a background of rising wages and not just inflation alone, as if wages never changed. Finally, I leave you with a wonderful link from BLS https://www.bls.gov/spotlight/2022/...r-lower-and-higher-income-households/home.htm This nice article explains why what we always thought was true is true. Low income folks are hit a little harder by inflation that those at the top. They've computed different inflation rates depending on what people buy! Below is a chart found at //www.aei.org/articles/have-wages-stagnated-for-decades-in-the-us/
"stated such"? Those are my words! If you find the exact wording anywhere I've been plagiarized! But of course the links I gave you show that what I stated is correct. Average wages do rise more less steadily with time by approximately the inflation rate but tend to lag a little. The result is that real wages are maintained not far from stagnant. The feds targeted inflation is against a background of rising wages!!! We tend to forget that. Those whose income does not keep up with inflation are obviously hurt badly over time. Currently in Mississippi the legislature is considering removing the COLA that is now a part of the State retirement system for all new hires. If they do that, then I would recommend that no one should accept a new job working for the State of Mississippi unless they are somehow compensated for elimination of the COLA from retirement pensions. But I know that some will foolishly hire on anyway. They will most likely offer private funding of retirement as an option but that's inferior because private plans lose the shared risk feature of defined benefit plans.
As I thought, this is what YOU believe to be the case. Historical dollar value decline gets in the way.
I disagree. You're not reading what I wrote. With respect to wages or incomes in general. It is the Real wages that count and real wages do track to a fair extent, although over time a gap tends to develop, the Fed's targeted inflation rate. Or said so that even a child could understand, if your one dollar buys have as much then if you have two dollars you can buy the same amount! Think about this for a moment and let it sink in. If what I told you is not correct, and we have only inflation say for 50 years with no increase in wages, all of the workforce would be on welfare. It should be obvious to you that what I wrote has to be correct.
You're putting words in my mouth. Value of the dollar, nothing to do with wages. For instance "The CPI can be used to show how the purchasing power of a dollar changes over time. The purchasing power of a dollar in 2022 was about 92.6 percent of the purchasing power of a dollar in 2021." https://www.bls.gov/cpi/factsheets/...:text=The CPI can be used,of a dollar in 2021.
While I not sure what your point was in your post immediately above, to say that wages have nothing to do with the value of the dollar may not be quite correct in some circumstances. Have you heard of "the wage price spiral" economists talk about. When prices "spiral" upward to counter too steeply rising wages, what do you suppose the immediate affect on the purchasing power of the dollar is. Does purchasing power go up or does it go down? Is there a word we use to describe falling dollar purchasing power and rising prices? Probably you know what that word is. Don't you find it interesting how too steeply rising wages will be countered by rising prices? My posts had to do with the converse. Built-in Fed price inflation being countered by rising wages. When these economic forces are balanced one gets constant real wages! That's what my post had to do with, in case you missed it... And, by the way, weren't my previous posts a little too long for you to read anyway . I guess that would explain why you didn't understand them.
%% OK So many exceptions to that rule, not really a good rule,even though many unionized new cars may fit that model.GM went bankrupt also, Chrysler almost the same. .Technology/ increase on productivity =lower prices. Robots replace many overpriced union workers. I had not even figured on a sate tax cut on food, which lowered food for 3 months by aboy10% Gasoline going nicely down\ Nice clothes can be has for much less with shopping wisely...... Some US hand tools prices may follow your theory LOL. But good US used tools=good downtrend on US tools, US dollars
I'm not suggesting, Turtle, that we are in a wage price spiral, I simply used that as an example of how wages can very clearly affect inflation. My original post had to do with the Fed's targeting 2% inflation causing compensating upward pressure on incomes, which includes wages and salaries. It's as though Newton's Third Law applied to economics. Fed policy does not exist in a vacuum. (Maybe I was too highbrow for this crowd in writing of our currency: "It is managed domestically with the intention that over time its domestic purchase power per unit will decline at a targeted rate, against a background of aggregate incomes rising over time at a similar rate." That's pretty much true so far as I can see.)