Thursday, August 25, 2011

First Significant Hint of Wage Price Inflation Beyond Silicon Valley

U.S. trucking companies may face a 30 percent surge in wage bills by 2014 as rising demand for freight shipments threatens to push the industry’s driver shortage to the longest on record, reports Reuters.

Aside from Reuters technical error on "shortages" (There are no such things when markets are allowed to clear), this is a very interesting data point. Up to now, the strongest wage gains have been seen for highly skilled specialist software engineers in the Silicon Valley area. Upward  pressure on trucking wages indicates developing wage inflation in the blue collar sector.

Company-employed drivers, who don’t own their rigs, earn average salaries in the mid-$40,000 range, based on figures from Norita Taylor, a spokeswoman for the Owner-Operator Independent Driver Association in Grain Valley, Missouri, according to Reuters.

But, forget the 2014 forecasts. Here's what is going on right now, according to Reuters:

Saia Inc. said this month it would increase wages by 2.5 percent for drivers and many other employees.

J.B. Hunt’s spending on wages, salaries and benefits rose 12 percent last quarter from a year earlier.

Bottom line: Price inflation, as expected is starting to spread. At some point, it gets real ugly.


  1. I thought Krugman and the keynesians said we have to worry about deflation though?

  2. Anonymous 9:34, yeah, according to them as long as there is high unemployment its imposible for wages to rise (they can not look beyond aggregates). But if the keynesians say it, who are the economist and reality to disagree?

  3. If we are getting nit-picky, it CAN be possible to have short-term labor shortages if there are prerequisites in experience or schooling.

    (Just like the Titanic was able to have a shortage of lifeboats - market clearing price isn't the right problem in those cases)

  4. Errores:

    Somebody done flushed the 70's down de ol' memory hole.