Wages don't grow because there isn't a shortage condition for labor. If there was a shortage, the price of labor (wages) would increase.
From what I've read, it became fed policy to make sure this labor shortage condition doesn't happen around the 1980s as a response to the stagflation of the 1970s. It was believed that one of the causes of the inflation was wage growth.
From what I understand, wages tend to go up when the red line is below the blue line in this graph, and you'll notice the red line is under the blue line a lot more before 1980 vs after. You'll also notice interest rate spikes start around the point where the red line meets the blue line, and spikes of unemployment happen soon after.
From what I've read, it became fed policy to make sure this labor shortage condition doesn't happen around the 1980s as a response to the stagflation of the 1970s. It was believed that one of the causes of the inflation was wage growth.
From what I understand, wages tend to go up when the red line is below the blue line in this graph, and you'll notice the red line is under the blue line a lot more before 1980 vs after. You'll also notice interest rate spikes start around the point where the red line meets the blue line, and spikes of unemployment happen soon after.
https://fred.stlouisfed.org/graph/?g=3uOu&utm_source=direct&...