Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios Pro Rata

Dive into the world of dealmakers across VC, PE and M&A with Axios Pro Rata. Delivered daily to your inbox by Dan Primack and Kia Kokalitcheva.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Nashville news?

Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Columbus news?

Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Dallas news?

Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Austin news?

Get a daily digest of the most important stories affecting your hometown with the Axios Austin newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Atlanta news?

Get a daily digest of the most important stories affecting your hometown with the Axios Atlanta newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Philadelphia news?

Get a daily digest of the most important stories affecting your hometown with the Axios Philadelphia newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Chicago news?

Get a daily digest of the most important stories affecting your hometown with the Axios Chicago newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top DC news?

Get a daily digest of the most important stories affecting your hometown with the Axios DC newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Rebecca Zisser/Axios

The Fed is mandated to worry about inflation. But the risk of runaway prices seems so remote that, at least for now, some Fed officials and leading economists are embracing what for decades has been rejected as heretical — allowing wages to keep rising without stomping on them with higher interest rates.

Between the lines: A question, however, is whether — given decades of largely flat wages — the Fed should go further to encourage companies to more aggressively raise their employees’ pay.

Driving the news: U.S. workers have had a 6-month run of real pay gains. Ordinarily, that would be a signal for the Fed, alert always to "wage inflation," to contemplate hiking interest rates and incentivize companies to slow the increases.

But this time, several Fed officials suggest they are open to extended real wage hikes, a sentiment that — should it become bank policy — could have both economic and political impact if living standards rise in places that since the 1980s have seen mostly decay.

Officially speaking, the Fed has no mandate to move wages. But it ends up influencing pay through its interest rate policy.

  • Meeting with reporters on May 16, Neel Kashkari, president of the Minneapolis Fed, said that if wages rise, "we shouldn't respond very much," per Reuters.
  • Two days earlier, Esther George, an inflation hawk and president of the Kansas City Fed, signaled support for wage increases. And, in remarks last month, Fed vice chairman Richard Clarida said pay gains are not pushing up inflation.
  • Last week, Reuters' Howard Schneider reported that the Fed as whole is reviewing how it treats labor and inflation — "a chance to lean into a new consensus that a low unemployment rate alone does not tell the whole story of the economy."

The big picture: The remarks come against the backdrop of some concern among Fed officials about deflation — avoiding an economy with no wind in its sails, and recession. Several governors have embraced the idea of targeting inflation even above the bank's 2% target in order to make up for below-target months and years. Rising wages would be part of the accommodation to above-target inflation.

What's next: I surveyed a small group of economists to ask whether the Fed should embrace not just more months of wage gains, but higher increases, in line with those of prior decades. The answer I got back was mostly “yes” — that would be a “fine idea,” as Lawrence Summers, the former treasury secretary, put it. But there was much hand-wringing on what the Fed could actually do.

  • "The question is what leverage the Fed has over wage-setting," Summers said. "The usual view is the main leverage comes from the Fed driving unemployment down. It's hard to imagine Fed jawboning employers." 
  • Jason Furman, chief economist for President Obama, agreed that the only thing the Fed can do is keep interest rates low."
  • Glenn Hubbard, chief economic adviser to President George W. Bush and now dean of Columbia University's business school, said "the best thing the Fed [could] do for wage growth is to continue to let the job market run hot."

But Karen Dynan, chief economist for the Treasury Department in the Obama administration, said the Fed has the power of its word — economic and financial actors often hang on the words of the Fed, especially Fed chairman Jerome Powell.

  • "Fed officials have taken some steps in the direction of encouraging faster wage growth by making it clear that there is room for wages to grow without pushing price inflation to undesirably high levels. [But] given that price inflation is still falling short of the target, I think the messaging could be a little stronger on that front," Dynan said.

Go deeper

D.C.-Beijing tensions are shifting markets

Illustration: Aïda Amer/Axios

U.S. markets stand to lose $2 trillion in value if D.C. and Beijing drift further apart.

Why it matters: Political chasms are showing up in new securities regulations that put companies and investors in a bind. The rules are also another reflection of how much relations between the world’s largest economies have cooled, even as they remain economically interdependent. 

29 mins ago - Health
Axios Investigates

Documents reveal the secrecy of America's drug pricing matrix

Illustration: Aïda Amer/Axios

American businesses spend hundreds of billions of dollars a year on prescription drugs, and the bills keep getting bigger. But some of the companies promising to help rein in those costs prevent employers from looking under the hood.

Why it matters: Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal.

Congress' chip-funding pause raises alarms

Illustration: Aïda Amer/Axios

Despite bipartisan support in the Senate, a plea by the Commerce Secretary and growing desperation from industry officials, Congress still can't get a key bill that funds the U.S. chip business over the finish line.

Why it matters: With the global chip shortage continuing to crimp the economy, the semiconductor industry has ramped up pressure for funding of U.S.-based manufacturing facilities as one remedy.