Wages and How They Can Destroy the World Essay

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Compensation has become a very contentious issue within the developed world of late. Economies are continuing to struggle. The EU has created a form of quantitative easing designed to restore wage growth and stimulate the economy. China is slowing as it transitions into a consumer driven economy as oppose to an export driven economy. Brazil is struggling with massive inflation and unemployment resulting in a recession for the country. America continues to grow but only at a 2% rate. This is well below the 3% GDP growth that many economist and experts are expecting. The world is lagging behind its historical trends of growth and development. As a result, compensation growth will naturally lag. Issues abound about how to properly stimulate compensation and wage growth throughout the world. The issue is particularly important for America, with 70% of GDP resulting from consumption of goods and services. This consumption will not occur without proper wage growth. Currently inflation is running at a 1.4% rate. This is below the Federal Reserve's target of 2% growth. Wages however have remained stagnant resulting in a loss of purchasing power by lower and middle class consumers. This loss of purchasing power has created a litany of issues in regards to professional compensation (Card, 1995).

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The first issue involving compensation is globalization. Currently, competition for jobs has intensified. This competition is due to the globalization. Emerging markets are now developing better training and onboarding programs for their respective constituents. This has created much more competition for labor. What was once an esoteric industry has now become one that is available to all market participants (Judge, 1998). As a result, wages have declined as supply has increased. More labor is now available for less job openings. This creates an intense competitive environment which ultimately results in lower wages and compensation growth. More applicants are chasing fewer jobs. Employers therefore have the luxury of negotiating much better employment term than those of the past. In addition, employers have a much wider array of available candidates to select from. This competition often results in lower wages are candidates are vying for few positions

In addition, the overall macro environment can cause wages to slow. This will be an issue that professionals must face for years to come. Slower wage growth is directly correlated to sluggish macroeconomic development. Businesses often raise wages when business is plentiful and consumer confidence is….....

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