Tyler Cowen asks

“They are a cornerstone of Chrysler’s unlikely comeback: 900 employees turning out a Jeep Grand Cherokee sport utility vehicle every 48 seconds of the working day at an assembly plant here.

Nothing distinguishes them from other workers at the Jefferson North plant, except their paychecks. The newest workers earn about $14 an hour; longtime employees earn double that.

…the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries.”

Here is much more, interesting throughout, and I thank Miles Robinson for the pointer.  By the way:

“Workers at Jefferson North said that the pay gap had not created visible tension.”

See the article for some qualifiers on this front, but there is nothing unusual or shameful in using the prospect of promotion to induce discipline.

A simple question: is this a) macroeconomic good news, or b) macroeconomic bad news?  That it “has to happen” may be bad news, I mean “that it is happening,” given initial conditions.  I vote for a), good news, what do you vote for?  What are liquidity trap proponents supposed to answer?

I am voting for good news all the way.

You might argue that lowering wages for existing workers would worsen their ability to service debt. However, this is only for new workers, which means it only improves their ability to service debt and it reduces unemployment and increase capacity utilization at the same time.

The fact that they have seem to overcome the efficiency wage and moral problems that New Keynesians posit is great news. And, that it is news supports the idea that these issues are important in understanding recessions.

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