Currently, the US workers are getting an increase in wage payment which is a good thing for them but not for big corporations who will have to bear extra expenses. Recently Federal Reserve Chairman Jeremy Powell said that country’s wage rate is increasing from last few years and now some analysts are worried about it. Because according to experts if average hourly wage increased at this rate, then it will create the problem of inflation since companies will have to raise prices of its products to mitigate the loss of paying extra wages. If we look into current record, then hourly wage rate has been increasing at 3% per year which is concerning. During Trump administration rate of unemployment has gone down which is a good indication and there are still 2 million jobs which are vacant for youth of the USA. Now some experts think Feds shall not increase its interest rate since current labor market is already creating rising inflation.
However, if we look at this whole situation from an investor’s point of view then according to our experts a person shall invest in those stocks of companies which has a low amount of labor cost. Wall Street is filled up with tons of companies which are performing good booty currently an investor shall consider one thing which is very important, and that’s labor cost. Companies like PayPal holdings, Alphabet and Biogen, have a significantly low amount of labor costs. Some experts think that investment in the biotech sector will be an excellent opportunity since this industry incurs most moderate amount of labor expenses. Big companies who have a vast number of employees working under them might not be investor’s favorite since they will have to extra amount of money to its workers.
The retail industry which from last few years hasn’t performed well will get another hit because of an increase in wage payments. Some socialists politicians are already against big corporations and wealthy people because they’re trying to bring wealth tax which might make things worse.