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Tue Jun 10, 2014, 10:46 PM Jun 2014

Wall Street Speaks Up for Workers

From the file of: what took them so long?

From the WSJ:

Investors aren't heartless, but they usually don't mind when workers' pay doesn't rise quickly. That is because slow wage increases, while painful on an individual level, usually keep corporate profits high and inflation low, creating better opportunities for shareholders.

And yet, as if anyone needed further proof that we live in exceptional times, Wall Street is starting to complain that wages are too low. "Without a real acceleration in wages it is hard to get a meaningful pickup in consumer spending," explained Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch. Weak consumer spending holds back profits and economic growth, one reason stock gains this year have been soft. Both the Dow Jones Industrial Average and the S&P 500 closed at records on Friday, but the Dow is up only 2.1% for 2014, and the S&P is up just 5.5%.

The problem is that new jobs often pay less than the ones destroyed in the recession, said Jack Ablin, chief investment officer at BMO Private Bank, which manages $66 billion in Chicago... Weak wage gains also are making it hard for the housing market to return to normal, Mr. Ablin said. He calculates that new single-family home construction is running at less than 500,000 a month. Demographics say it should be twice that, he said.

"People are waiting longer to get married and they are having fewer kids," Mr. Ablin said. That is making them delay home purchases. "It is certainly making us a little more cautious on the economy."

More..

http://online.wsj.com/news/articles/SB20001424052702304710104579611063908924886

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