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The Relationship Between Wages & Inflation
Inflation and wages are kind of a chicken or egg issue. Do higher prices cause higher wages or do higher wages cause higher prices? I suppose it’s probably a little of both. There is an obvious relationship when you look at the data. Here’s a look at year-over-year wage growth versus trailing twelve-month inflation going back to 1965: chart Wages grow faster than prices most of the time, but not always. Since 1965, wages have been growing above the rate of inflation a little less than 60% of the time. The worst period by far for wages falling behind prices was the 1970s. From 1973 to 1976, wage growth was ... (full story)