James Devine wrote: >does anyone know when (and where) Alan Greenspan suggested that low >inflation in the U.S. could be attributed to increased worker economic >insecurity despite falling unemployment rates? who were the main critics of >this theory and where did they write? Greenspan to the JEC, June 10, 1998: >In the first few years of the expansion, the subdued rate of rise in >hourly compensation seemed to be, in part, a reflection of greater >concerns among workers about job security. We now seem to have moved >beyond that period of especially acute concern, though the flux of >technology may still leave many workers with fears of job skill >obsolescence and a willingness to trade wage gains for job security. >This may explain why, despite the recent acceleration of wages, the >resulting level of compensation has fallen short of what the experience >of previous expansions would have led us to anticipate given the current >degree of labor market tightness. In the past couple of years, of >course, workers have not had to press especially hard for nominal pay >gains to realize sizable increases in their real wages. In contrast to >the pattern that developed in several previous business expansions, when >workers required substantial increases in pay just to cover increases in >the cost of living, consumer prices have been generally well-behaved in >the current expansion. Changes this past year in prices of both goods >and services have been among the smallest of recent decades. Greenspan to the House Banking Committe, July 21, 1998: >For one thing, increases in hourly compensation have been slower to pick >up than in most other recent expansions, although, to be sure, wages >have started to accelerate in the past couple of years as the labor >market has become progressively tighter. In the first few years of the >expansion, the subdued rate of rise in hourly compensation seemed to be, >in part, a reflection of greater concerns among workers about job >security. We now seem to have moved beyond that phase of especially >acute concern, though the flux of technology may still be leaving many >workers with fears of job skill obsolescence and a willingness to trade >wage gains for job security. In the past couple of years, of course, >workers have not had to press especially hard for nominal pay gains to >realize sizable increases in their real wages. In contrast to the >pattern that developed in several previous business expansions, when >workers required substantial increases in pay just to cover increases in >the cost of living, consumer prices have been generally well-behaved in >the current expansion. You can read AG talking about this in the present tense rather than the past by paging through his testimonly collected at the Fed's website, <http://www.bog.frb.fed.us/>. By the way, Laurence Meyer has turned out to be very hawkish. Isn't he some sort of Keynesian? Doug
