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.
I've been looking into this since Friday. I was very unnerved to find that not only has the Birth/Death adjustment been in place since only 2001 and with this adjustment previous admins would have shown far more job growth than they did but that we switched from the standard job counting model that we once used in the early 80's that would show approx he same unemployment as Europe. I can't believe it but apparently unlike Europe we don't count people as unemployed after a certain time frame where they continue counting them. I fell like someone has been blowing sunshine up my skirt for a long time. What in the world does this mean for the “real value of my investments in equities? I think I’m selling some if not all this week. Anyone have advice?
Bingo!
If a person is willing to accept the wages, then they must live with it. It is a free country, a person is free to go seek another job, start their own business, or be an entrepreneur. I myself prefer commission sales.
3 yeas ago I was a 20 year professional computer consultant at $45/hr. My job disappeared and so has my income and any taxes paid.
You'll find many in this forum who will say that I need to suck it in and take a McDonalds job, but that doesn't pay my bills nor pay the taxes on the same level as I have for 20 years.
They'll never convince me that this offshoring/h1b/illegal vicious cycle is all hot air and non-existent.
I'm looking to dump the American computer market as quickly as it dumped me.
They do when traitorous administrations have insured that those countries recieved the fruits of our technological research while acceeding to their overlord's every demand at the Trade table. If our country was caught in a another global conflict we'd be totally screwed because our entire manufacturing base has been outsourced. That's a drop from Superpower to supremely dependent customer.
Somebody should be feeling his own pain.
You might want to look up the word fungible in the dictionary. Then naive.
LOL! Free country, my ass.
Falling wages is one of the many signs of our falling economy and corresponding integration into a North American Union.
The manufacturing and technological capacity of America has been raped by the politicians and CEOs. What remains is a finance-based economy. It won't last forever.
the first place I will look for new employment when I lose my tech job is government - let the free traders pay my way.
It is up to your own personal decisions that decide if you are successful in this country. Name a country that has more freedom than America.
Let us look at India for example. Why do you think that India is less free?
we all know that every budget problem in the US can be traced to skyrocketing medical and pensions benefits.....
if we do that, we CAN reduce taxation and improve the prospects of SS much more easily.....
If only you were a shareholder instead of a customer.
Are you serious? Do they have a Bill of Rights? Doesn't India have some sort of cast system in place (racism). Aren't they still pulling carts with donkeys?
One down, got more?
When the government/korporate power structure controls 50%+ of the money in this country, that is an absurd statement to defend.
Name a country that has more freedom than America
There isn't one. I never claimed there was.
This is *not* a Free country. But it is less unfree than any other country, and certainly closer to the ideal than any other country.
Totally outsourced? I thought we had over 14 million employed in manufacturing. Did they get laid off over the weekend?
No, but does USA has Magna Carta?
Seriously, can you give example of the freedoms that Americans have and Indians do not? Can Indians travel to every country they wish or cannnot? Can they start a newspaper if the want? Can they smoke tobacco? Do they have freedom of speech?
Doesn't India have some sort of cast system in place (racism).
Cast system is not a legal institution - it is a custom and is not everywhere followed.
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