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This week's labour market figures, believe it or not, contain some good news.
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They show that wages have fallen in the last 12 months, by 2.1 per cent in the year to February. Yes, this is mostly due to lower City bonuses. But even in manufacturing average wage growth is a mere 1 per cent, which implies that some workers in this sector have seen nominal wage cuts - quite deeply so in some businesses.
This is good news because it suggests that one big danger of deflation might not be as great as some economists fear. In their book Animal Spirits, George Akerlof and Robert Shiller say that workers can be reluctant to take nominal pay cuts. This means that as prices fall, real wages rise. And this in turn causes employers to sack even more workers than they otherwise would, in an effort to hold down costs.
However, today's figures, along with evidence that workers are accepting pay cuts, suggest that zero might not be as strong a floor for wage growth as they fear - perhaps because the prevalence of profit-related pay means that overall wages are flexible even if pay settlements aren't. This means that wages might follow prices down. Which in turn means the danger of a big profit squeeze and even huger rise in unemployment than we are likely to get is perhaps not so great.
Now, we must be clear here. A cut in nominal wages is not necessarily bad for workers, as long as prices fall too. If wages and prices fall together it is a sign not that workers are being ripped off, but that people are behaving rationally, and are not guilty of money illusion, or of making a fetish of zero nominal wage growth.
Yes, unemployment will continue to rise. And of course, employers will use this to screw wages down and workers will fight this. That's normal class conflict. But money illusion - resisting nominal pay cuts whilst prices fall - would merely deepen the recession and add to joblessness. This week's figures give us a little hope that ordinary workers are smart enough to know this. What a shame that others aren't so rational.
Read more of my musings at www.investorschronicle.co.uk/chrisdillow.
A selection of my favourite blogs, and data sources, appears under 'External links' on the right-hand side of the page.
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