ZCZC
BCN-03
US-ECONOMY-BANK-PRODUCTIVITY-WAGE
Persistent slow growth cuts wages in half: Fed’s Powell
NEW YORK, March 1, 2019 (BSS/AFP) – Persistent slow growth rates over
decades can cut wages for American workers in half, Federal Reserve Chairman
Jerome Powell said Thursday.
The central bank chief said the US economy faced a long-term challenge of
raising productivity to boost growth, including finding ways to get more
workers into the labor force.
The US economy grew at an average rate of about three percent a year from
1991 to 2007, but since then growth has averaged just 1.6 percent, he said in
a dinner speech.
That put the brakes on wage growth, and resulted in incomes being almost 20
percent lower than they would have been if the economy continued to grow by
three percent a year.
“From the standpoint of future Americans, if the slower growth persists for
a half-century, incomes will end up roughly half of what they would have
been,” Powell said.
One cause of the slow productivity gains — despite strong US business
investment and historic low unemployment rates — is the relatively low rate
of workers age 25-54 in the labor force, especially men, he said.
The US now has the fourth lowest participation rate for male prime-age
workers of 34 advanced economies, Powell said.
This is partly driven by the growing need for higher-skill workers, and he
urged steps to “create an environment in which productivity can flourish.”
“Policies that succeed in enhancing productivity growth would greatly
benefit future generations,” he said.
BSS/AFP/RY/08:55 hrs