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Real wages fall at fastest rate in 14 years
Financial Times ^ | May 10 2005 | Christopher Swann

Posted on 05/10/2005 2:39:12 PM PDT by nickcarraway

Real wages in the US are falling at their fastest rate in 14 years, according to data surveyed by the Financial Times.

Inflation rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index. In the final three months of 2004, real wages fell by 0.9 per cent.

The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent.

Stingy pay rises mean many Americans will have to work longer hours to keep up with the cost of living, and they could ultimately undermine consumer spending and economic growth.

Many economists believe that in spite of the unexpectedly large rise in job creation of 274,000 in April, the uneven revival in the labour market since the 2001 recession has made it hard for workers to negotiate real improvements in living standards.

Even after last month's bumper gain in employment, there are 22,000 fewer private sector jobs than when the recession began in March 2001, a 0.02 per cent fall. At the same point in the recovery from the recession of the early 1990s, private sector employment was up 4.7 per cent.

Stagnant salaries push more families towards the breadline

A surfeit of workers and the threat of off-shoring are allowing companies to call the shots on wages.

Go there

“There is still little evidence that workers are gaining much traction in their negotiations,” said Paul Ashworth, US analyst at Capital Economics, the consultancy. “If this does not pick up, it raises the prospect of a sharper slowdown in consumer spending than we have been expecting.”

Economists are divided over the best source for measuring pay increases in the US, since the government releases three main measures. A gauge of average hourly earnings is released with the employment report. This rose by 0.3 per cent in both March and April and 0.1 per cent in February. Even with a slight rise in the hours employees are working, from 33.7 to 33.9, this suggests wages are struggling to keep pace with inflation. The gauge covers non-supervisory workers, about 80 per cent of the workforce.

The Bureau of Economic Analysis figures for personal income showed wages rising at close to 6 per cent in 2004 but slowing down since. This measure also showed wages rising by just 0.3 per cent in each of the past 2 months. This is a broader gauge and includes small businesses and professional partnerships, but it measures total corporate wage bill rather than wages per person.

The Employment Cost Index, seen by some as the most reliable measure, excludes overtime and professional partnerships.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Front Page News; Government; Miscellaneous; News/Current Events; Politics/Elections; US: District of Columbia; US: New York
KEYWORDS: demographics; economy; proiductivity; wages
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To: kaktuskid

I'd say take it out of congress's pension fund, but that would be mean spirited. A larger weathier tax base means more federal tax receipts. The 40 or 50 billion the federal the loses from suspending the gas tax would be made up in new taxpaying jobs created.
And we need to look at the federal budget as a whole. We lose tens of billions of dollars a year in medicare and medicaid fraud. The vast majority of money spent in D.C. goes to bureaucratic costs. The money is most likely already there. But the politicians don't have the will to get it done.


21 posted on 05/10/2005 3:00:46 PM PDT by jimfrommaine
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To: kaktuskid
And who pays to maintain the roads?

Union thugs can work a day for free for a change.

22 posted on 05/10/2005 3:01:07 PM PDT by Lazamataz (Not Elected Pope Since 4/19/2005.)
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To: nickcarraway

That does it, we are doomed.


23 posted on 05/10/2005 3:01:29 PM PDT by RetiredArmy (IF YOU HATE DEMOCRATS - CLAP YOUR HANDS!!! clap clap clap)
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To: Lazamataz

Let's fire the union workers and use welfare recipients.


24 posted on 05/10/2005 3:03:40 PM PDT by jimfrommaine
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To: sure_fine

Yep gas prices are starting to take their toll......Good thing the Dems have blocked every energy initiative during the last 10 years. Another mess to clean up.


25 posted on 05/10/2005 3:07:28 PM PDT by Wristpin ( Varitek says to A-Rod: "We don't throw at .260 hitters.....")
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To: nickcarraway

Misleading article. IIRC, the wage calculation used doesn't include or undervalues many benefits, commissions, and other non-standard forms of compensation.


26 posted on 05/10/2005 3:10:41 PM PDT by Diddle E. Squat
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To: bill1952

Or NAFTA, GATT, and the WTO.

Nothing to see here. Please remain calm and go about your business.


27 posted on 05/10/2005 3:11:36 PM PDT by LibertarianInExile (The South will rise again? Hell, we ever get states' rights firmly back in place, the CSA has risen!)
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To: nickcarraway
Up to are arses in illegals working for $10,00/hour, and now offering them subsidized health care, who is amazed.

Get used to the idea of "harmonizing" America and the third world, as the only people who will ever appear on any ballot you will ever again see have. Most of your politicians and those who produce what is "news" live in "gated communities", soon most of "us" will be living in what amounts to Mexico city, outside those gates.

As the gremlin in that dumbass movie stated years back, "invest in shotguns and canned food".

The wife says, "suck it up and get used to it". She is probably correct in this regard, as there is no salvation and no option other than acceptance or outright revolution. We are all to afraid to revolt, so likely the nation will simply acquiesce. And don't bother posting the individual "I will never surrender on this issue" crap notes, the country surrendered for you and you will vote in vain to change what is already a foregone conclusion to this issue.
28 posted on 05/10/2005 3:11:37 PM PDT by mmercier
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To: nickcarraway
Yep gas prices are starting to take their toll.

Yep.

29 posted on 05/10/2005 3:15:42 PM PDT by syriacus (Weird George Felos repeatedly flicked his tongue out his gaping mouth when lying to the press 3/31)
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To: kaktuskid
And who pays to maintain the roads?

Come visit California and see what our tax $$$'s don't do....

30 posted on 05/10/2005 3:19:14 PM PDT by freebilly (Go Santa Cruz Baseball!)
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To: nickcarraway
the uneven revival in the labour market

Don't trust any article about the American economy or the American anything that spells labor that way.

31 posted on 05/10/2005 3:19:29 PM PDT by RightWhale (These problems would not exist if we had had a moon base all along)
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To: nickcarraway
A surfeit of workers and the threat of off-shoring are allowing companies to call the shots on wages.

Um-hmm. Note that the entire wage structure is being degraded. That's the result of sending our jobs to China, India, and elsewhere. It's also a consequence of permitting excessive immigration, both legal and otherwise, as well as H1B and L1 visas.

So when YOUR wages get cut, be sure to give a free traitor an appropriate gesture.

32 posted on 05/10/2005 3:22:00 PM PDT by neutrino (Globalization “is the economic treason that dare not speak its name.” (173))
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To: Waterleak
Why thats easy, the Social Security General Fund does.

Sorry, It really bugs me when people insinuate that money for roads comes from general taxes. The insinuation that roads are also a "form of socialism" is also quite faulty, roads are built and maintained by capitalists. Roads are built with Highway Bonds, a capitalist instrument that pays interest. The bonds and maintenance are paid for through road taxes, registration fees, and gas taxes, ALL USER SUPPORTED. If anything you ever bought came to you on a truck, somewhere a tax was paid specifically on the roads in the price. For more info see here:

http://www.fhwa.dot.gov/policy/ohim/hs02/pdf/hf10.pdf

33 posted on 05/10/2005 3:24:14 PM PDT by morque2001 (Life is a tragedy for those who feel, and a comedy for those who think.)
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To: Walkin Man

34 posted on 05/10/2005 3:36:54 PM PDT by NewRomeTacitus (Novus ordo seclorum.)
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To: LibertarianInExile

"Nothing to see here. Please remain calm and go about your business."
But you forgot the part of "And just pay your taxes"


35 posted on 05/10/2005 3:39:19 PM PDT by Burf (Perhaps the Republican Party is best served as the minority)
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To: AdamSelene235; nickcarraway
Over 90% of this increase is due to the Birth/Death Model.

And modeling the birth/death of businesses doesn't accurately measure job creation/loss?

36 posted on 05/10/2005 3:46:43 PM PDT by Toddsterpatriot (If you agree with Karl Marx, the AFL-CIO and E.P.I. please stop calling yourself a conservative!!)
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To: Toddsterpatriot
And modeling the birth/death of businesses doesn't accurately measure job creation/loss?

Measuring annd modeling are two different things.

37 posted on 05/10/2005 3:48:30 PM PDT by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: AdamSelene235
And modeling the birth/death of businesses doesn't accurately measure model job creation/loss?
38 posted on 05/10/2005 3:53:11 PM PDT by Toddsterpatriot (If you agree with Karl Marx, the AFL-CIO and E.P.I. please stop calling yourself a conservative!!)
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To: jimfrommaine

"As will cutting all federal regultations. And suspending the gas tax is a good move."

I'll be waiting for that.


39 posted on 05/10/2005 3:56:13 PM PDT by dljordan
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To: nickcarraway

Well I know I can thank Capital One for eliminating a boatload of really high paying jobs in the IT sector for these last couple of quarters.


40 posted on 05/10/2005 3:57:37 PM PDT by Centurion2000 (The human race divides politically into those who want people to be controlled and those who don't)
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