US wage growth and lower oil prices

For the past year or so, income for low-paid workers has been growing steadily at about a 4% annual rate, double the speed at which income has been expanding for workers in general.  In addition, it seems to me that low-income workers benefit the most, in percentage terms, from the fall in energy prices.

This is not to say that low-income workers are exactly feeling flush.  But in incremental terms, they’re becoming better off at greater speed than their high-income counterparts.

In addition, many of the firms patronized by the wealthy, especially luxury goods purveyors, are international concerns exposed to things like the ongoing shift in China’s spending away from Western goods to domestic, as well as the lower value in dollars of their foreign sales.

Both trends suggest a shift in Consumer Discretionary exposure away from large multinationals and toward smaller, US-focused firms that cater to the man in the street.  The trick, though, is to find companies where the benefit from higher sales is greater than the increase in the wage bill for lower-income employees.  TGT, anyone?

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