A "momentous shift" in the labor market

That's the phrase used by John Authers to describe the above chart, which depicts about 25 years of changes is wages for low-skilled and high-skilled workers.

"For the third month in a row, wages for the low-skilled have risen faster than for the high-skilled. In the previous history of the survey, which now goes back almost 25 years, this had only ever happened in two months, in early 2010. Wage growth for the low-skilled is also exceeding that for the high-skilled by the most on record. 

In terms of the momentous macroeconomic issues of the moment, this is good for growth, as poorer people are more likely to spend their pay rises than richer people. It’s also potentially bad for inflation. Wage growth for the lowest skilled is the fastest since August 2008 (not coincidentally, the month before the Lehman bankruptcy), and that could easily lead to higher prices. 

More interestingly still, it does suggest a shift in the balance of power between labor and capital. This isn’t as yet a deep-seated or well-established trend, of course. But if it continues it could rattle a lot of assumptions, and alleviate a lot of social tension.

And that leads to one final readthrough. Low-skilled workers endured a truly terrible deal from 2011 to 2013, when their wages didn’t even gain 1% per year. Higher-skilled workers did far better. Barack Obama was president at the time. If any one chart helps to explain how Donald Trump was able to disrupt the coalition that elected Obama, this might be it. And if this continues, it could be fantastic political news for Joe Biden, who could do with some at present. It’s worth watching this, very closely. "

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