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“Question: Don't wages fall all the time?
Answer: Real wages fall all the time, and nominal wages often fall when workers change jobs. But nominal wages hardly ever fall for a given worker at a given job - even when there's massive excess supply of qualified labor.
Question: OK, so why don't nominal wages fall for given workers at given jobs?
Answer: Because almost all employers realize that nominal wage cuts are terrible for morale - and bad morale is bad for worker productivity.”
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