“For the last four years or so average wages in Australia have barely kept pace with inflation, meaning no real pay rises. And all the while, the government has been betting on the market to improve things.
Treasurer Scott Morrison stated:
As the labour market tightens, that’s obviously going to lead over time to a boost in wages.
As the Treasurer asserted, economic theory says these conditions should lead to rising wages, but they aren’t. The country continues its record run of 26 years of economic growth and the banks and other big corporations continue to post record profits.
The Reserve Bank of Australia is at a bit of a loss, speculating at its latest meeting that maybe globalisation and technology are to blame.
However, to understand what’s really going on it’s helpful to look at something most economists and politicians ignore: history.”