[PEN-L:4690] "Sizzling Job Numbers Won't Spark Inflation"

[JDevine@xxxxxxxxxxxxxxx]

BUSINESS WEEK's "Business Outlook" (June 26, 1996) by James C.
Cooper and Kathleen Madigan reports on the surge of employment.
But they argue that there won't be any inflation surge as a
result:

"But in today's world, faster growth may not mean faster
inflation. Four factors are short-circuiting the wage-price
spiral: Higher productivity means unit labor costs are growing
more slowly than wages. General economic insecurity prevents
workers from pressing employers on pay. The decline of unions
further undercuts workers' bargaining power. And global rivalry
is suppressing companies' pricing power."

Sounds like an application of the "reserve army of labor" theory.
Combined with reports of stunningly high profits (reported in
other issues of BW), it sounds a bit like the late 1920s.

in pen-l solidarity,

Jim Devine   jdevine@xxxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ., 7900 Loyola Blvd.
Los Angeles, CA 90045-8410 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"Segui il tuo corso, e lascia dir le genti." (Go your own way
and let people talk.) -- K. Marx, paraphrasing Dante A.