You can bet that after the Nov elections, our taxes are going up as a result from the gov't 'needing' more money becuase of higher prices from their own poor energy and economic (sub-prime) policies. By the time those go into effect in 2009, Gas will most like have settled in at $4.25 / gal....food will be at least another 25% higher....wait until you see the price of meat late summer/fall.
So, that being said, no way are wages going up as businesses absorb the effects of high energy costs.
Here in NC we are expecting an already approved 3% hike in electricity stating around June 15.
Also, 3 weeks ago, the local MSM was doing a report on how there's now a shortfall in revenues for the state goobermint. We've also grant an insurance rate hike of 5.5% effective 07/01/2008. Less than a year ago, the state's coffers had a $1.8 billion surplus.
The domino's are getting ready to fall quickly.
Of course frugal families with 6-figure combined incomes will not be affected as harshly, but, what do people think is going to happen to the couple with 2 kids and a $65K combined income (gross) and a $110k double-wide / condo / small SFD, a dog, and 2 cars???
People can call me nuts, but the federal gov't just finished hiring 76,000 new people the 1st qtr of this year.
One factor to consider is that business, and consumers, can adjust somewhat to the higher energy prices. We spent a lot of money retrofitting our office buildings to save on energy and that has really paid off. I notice the food service companies no longer deliver food exclusively by semi rigs and use smaller vehicles instead.