Source: Federal Reserve Bank of Atlanta

Asia Unhedged has noted the deflationary impact of the gig economy – the trade-off of flexible hours for modest compensation. The latest wage growth tracking numbers from the Atlanta Federal Reserve show decelerating wage increases, notably for part-time work. Year-on-year wage growth for US part-time workers was only 2% as of February, which is a pay cut after CPI inflation of 2.2%. That doesn’t square with the Federal Reserve’s Phillips Curve model, which says that wage growth (and overall inflation) should increase as unemployment falls.

With labor force participation at a very low level, there are millions of workers willing to come back into the workforce provided that they can choose their hours. Many of these are well-educated women with children who do not want full-time employment. The ride-sharing model has spread to corporate services and other parts of the economy. That keeps wage growth far lower than the conventional models forecast.