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Massive Wage Inflation In 2013

|Includes: SPDR S&P 500 Trust ETF (SPY)

The average wage earner will have 2% - 3% less in their pay check this month due to FICA and other tax increases. But the big surprise will come to Executives for most companies. They will find that since they are in the higher tax bracket their pay checks are cut by nearly 6%.

The result then becomes extra nasty for the average wage earner because of what happens next.

Companies that were going to give their workers 3% increases and their execs double of that will now need to rethink their strategy. This is because of the revolt that will ensue from mahogany row.

The theory being that there is only so much money for the wage increases.

So in order for the company to give the Executives their 6%, companies will give their workers an even smaller wage increase. If they are lucky,the workers will find their pay checks will be as large as in 2012.

The result will be a massive worker revolt across America. In order to get a 5-10% pay increase workers will switch companies.

In 2012 many workers were hired at pay rates 10-30% above the ones they were replacing. The result is that many companies have uneven pay in many departments. The reaction by companies to the Obama tax increase will create even more disparity, and help motivate workers to switch jobs.

Obama promised it is.

This will lead to significant wage inflation, unless companies switch back to giving stock options and congress makes giving them easier.

Economists at the fed have signaled at no inflation for years because there was no wage inflation and the cost of housing in their magic formula brought inflation to near 0.

One of the causes of the unemployment that we have today is new technology. For example the workers needed to produce a newspaper are 90% less today than they were 30 years ago because of automation.

Even making a prototype, or making a small run of a product no longer requires much labor, thanks to 3D printing and other forms of automation.

The people that are in the workforce, with good jobs are highly trained and need to be replaced with others that have the same skill set.

As a result of this change by the end of 2013 economists will be singing songs of higher inflation to come.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.