Posted on 05/11/2005 2:00:03 PM PDT by ninenot
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.
"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.
In all fairness, given that "wages" do not typically include income from small businesses, and from various investments (including real estate) I will concede that some of the doom and gloom is probably not warranted. That said, I would also concede that wages for people who get most of their income via working for someone else probably have gone down, especially when normalized to inflation.
I beg to didiffer!
Hillary is going to win a slimeslide in 2008. !!! ;-))
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The unemployment rate is at 5.2%......the lowest in memory and all we get is whine whine whine.
The unemployment rate is at 5.2%......the lowest in memory and all we get is whine whine whine.
Unfortunatley, the DUmmies are getting the upper hand on FR.
I'm doing better than I've ever done -- about to buy a house with a cheap mortgage, BF just got a $5/hr raise in MANUFACTURING, and I don't have to lift a finger -- can stay home and grow my organic garden with my three year old. Life is good.
It would be better though, if this were actually a free market, instead of some crappy illusion of one.
Who was the president in 1991? Someone can refresh my memory?
Alan Greenspan? :-)
Common sense tells us that working people realize Social Security and Medicaid are destructing before them. Wages are lower because employees are VOLUNTARILY electing to put the difference into personal retirement programs. Everyone comes out ahead in the end.
Take a few minutes to educate yourself on HSA's and DB's.
Employment is great. Witness the FReepers stampeding to post this article.
But looking at the BLS page, you'll find that his numbers hold up.
Employment cost (overall) is not what's being discussed--only wages.
Yeah--the massive movement of money into pre-tax shelters is grinding down national stats on wages.
Get serious. It's statistically insignificant.
He lost.
Hint: a Globaloney-One-Worlder with an agenda that did not include the majority of voters--just certain segments thereof.
Familiar name, though.
I don't even take note of this crap anymore.
Really, it's waste of time.
According to a "study" or a "research paper" (Covering a small window in time and excluding all other time periods that don't fit into/feed the right data for the desired predetermined outcome), our real wages are sinking. OMG, I'm really nervous now!
All these "studies" and all their findings are really confusing me. I still haven't figured out if I should eat butter or Margin? Is caffeine OK or really bad? What about the pill? What did this "study" find again? Ah, yea this article was on the acid rain studies and how all our forest will be dead by 2000. Or was it the “we’ll be out of global oil reserves by 2000” study? Really, these studies confuse me. Why was there this fixation on the year 2000 by all these green groups? Did God create the Earth and say "If you're bad I'll have your oil run out on 1 JAN 2000 at 00:00:01"? Really? What is the probability that with some random number of trillion barrels of global oil reserves, 4.5 billion years of this planet being around, some un-programmed level of oil consumption over several hundred years-causing all the worlds oil to run dry by 2000 sharp? Did they get their facts form “The Hitchhikers Guide to Environmentalism?”
Anyway-back on topic,
Did you now we have a "jobless economic recovery" according to the MSM? No, really! Weird how unemployment is AT FIVE POINT TWO PERCENT and the MSM talks of a “jobless economic recovery”? Again, that’s Five (5) Point (.) Two (2) Percent (%) unemployed in these hard desperate jobless times when real wages are dropping (Only if you look between some certain dates-the fine print of the article).
So, I was told automation would replace workers and we’d all be unemployed because we’ll loose our factory jobs (1970-1985 or so) at the assembly plant. Now we have millions working in the IT industry and some are telling me that everyone will loose their job again. According to several “studies” in the past, our real wages were dropping and America was getting poorer than ever. Wait, are we recycling themes here in a round about way? No way. As Ronald Reagan once asked the American people “Are you better off today than four years ago?”, I’d like to ask- “Are we worse off than 5.4 years ago?” Truth is, even if we complain and want more and better (That’s a good thing!), our standard of living over time as gone up and up in the long run. Despite all the “jobless recoveries”, “working poor”, “decline in real wages” and and and it at least SEEMS or APPEARS to me (But I can only really remember back to about 1978) that over time things have been getting at least a little better. But that’s a personal perspective and not a conclusive, hard, indisputable, empirical, factual, “study”.
Red6
And toasters are just $5 at Wal-Mart! Everything is perfect!
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Actually, thats just it. Free trade benefits everyone.
Let's take the arguments to the extreme - at the extreme end of those who don't favor free trade are the self sufficient (and impoverished) communes that are common under communism. The other end of free trade had hardly ever been experienced because government gives itself power to block it, thus interfering with the comerical activity of its citizens. Free trade is BLOCKED by government.
Those who are against free trade are for Big Government. Just be honest with yourselves about this because many claim to be 'Conservative' in ideology. If your a Conservative against free trade you are a Conservative for big, powerful and tyranical govenment. Who is government to tell you what you can and cannot buy and sell overseas?
We saw an economic boom after NAFTA and we'll see an economic boom after any free trade agreement. The doom and gloom crowd were wrong!
The similarities between the anti-free trade crowd and liberalism are striking.
And things really aren't going to get better due to a demographics crunch. Of course, the preception should be worse than the reality.
There is a difference. 1970-1985 factory jobs did not get outsourced to China. If this had happened the "automation" you talk about would be much less profitable (very cheap labor can inhibit technical improvements) and the huge trade deficit would occur earlier.
High tech jobs when they move to China or India do not get "automated". And the bill for the trade deficit will come, believe me.
What is the new thing average Americans will do? Nanotechnological brain surgery? Flying to Mars? Financial services to the rest of the world? What is your prediction?
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