Inflation is stinging U.S. workers harder

Wall Street Journal ^ | August 22, 2008 | Joellen Perry

[reaganaut1]

Consumer prices are rising at their fastest pace in more than a decade in both the U.S. and the euro zone. But it's affecting workers on the two sides of the Atlantic in very different ways.

Unions are more powerful in the 15-nation euro zone than in the U.S., and many laws and practices there are more worker-friendly. That's part of the reason why many European workers are keeping up with inflation better than their U.S. counterparts.

Wages and salaries in the euro zone were 3.4 percent higher in the first quarter than in the year-earlier period, matching the first-quarter annual inflation rate. It was the steepest wage increase in the 15 countries that share the currency in nearly six years. Inflation in the euro zone hit 4 percent in July, and many economists expect wages to keep rising this year.

In the U.S., where unions are weaker and wages aren't often indexed to inflation, workers fell behind. Consumer prices were 4.1 percent higher in the first quarter than in the year-earlier period, but workers' wages and benefits increased 3.3 percent over the same period. Inflation has risen further since the first quarter, hitting 5.6 percent in July, while compensation growth has slowed.

What's good for Europe's workers, however, could prove costly to its economy. As European wages rise, employers come under pressure to increase prices to cover labor costs. The added danger in countries where wages are formally indexed to inflation is an inflationary spiral that's hard to tamp down. Sharp wage increases could prompt European companies to lay off workers or move more jobs to countries where labor is cheaper.

[reaganaut1]

High government spending has lead to budget deficits, a weak dollar, and inflation. Bush and the congressional Republicans deserve a good bit of the blame. They see the short-term political benefits of more spending but now face the long term consequences.

Having Democrats in charge of the Presisdency and Congress will make things worse, but Republicans have little credibility in making that argument.

[longtermmemmory]

The WSJ living up to its crown and the most left win biased NEWS division. (more than the NYT)

“workers”? Why not citizens? why not residents? inflation hits EVERYONE.

Control inflation and I can hire more “workers”.

Control inflation and I can invest more in growing my business.

Reagan, by holding the line on Patco, assured the USA would not beome a nation enslaved to the Unionistas. Unions in europe had a heart attack when Reagan succeeded because it meant the USA would not be union dominated.

[Incorrigible]

A weak dollar, if maintained consistently (a big if), has benefits to American workers as well.

When managers decide to increase traditional manufacturing production, the USA looks a lot better than the years with an overly strong dollar.

You can't just pick up a factory in China and move it to America so it's not something that happens overnight so that's why the consistency has to be there.

A yo-yoing dollar does nobody any good except financial speculators.

 

[big'ol_freeper]

Soon all the stories of the growing problem of homelessness will begin to be aired. After all, its election time and the big bad heartless Republican Party occupies the White House.

Bet on it.

[Pikachu_Dad]

The minimum wage hike proves to be just hot air as the government deflates the dollar to pay for it.

[Chode]

i'd love to see a comparison price of the USA, England, Germany, France, Italy and Spain between 2000 and 2008 for:

a gallon of gas, a gallon of milk, pound of steak, pound of potatoes, head of lettuce, pound of tomatoes, dozen ears of corn, pound of bacon, dozen eggs and a loaf of bread.