Wage growth trails profits Salary increases are the smallest in 25 years

Houston Chronicle ^ | Oct. 28, 2005 | JESSICA HOLZER

[cynicom]

I have yet to see any large conglomerates demanding the illegals be removed. I suspect the answer is easy. Even if they do not employ directly, the illegals presence helps keep the labor market filled with cheap labor and depresses wages. They all benefit.

[nettuno]

4.7% inflation doesn't that seem high? Can anyone confirm this number?

[Black Tooth]

"If compensation does not keep up with inflation, then consumption will go down and people will have to borrow more," he said.

Screw the borrowing part!

We are just spending less, driving less, not buying anything unless we absolutely need it. Gotten to the point where few are getting raises or increased salaries.

Yet some people tell us how the economy is booming.

I say BS. Most everyone I know was making the same or better money 5 freaking years ago.

[proxy_user]

I'd rather compete with them here. All the Indian guys I know have huge mortgages, and need huge salaries to pay them. Of course, now that they've got a green card, they don't want to see any more H1Bs either....it's quite a joke around the office.

[dangus]

A 4.7% boost in profits is hardly an explosion. Wage growth measures the base line at an income of zero. Profit growth measures the base line at an income equal to expenses. So profit growth tend to be much more dynamic than wage growth; In recessions, workers don't get negative wages!

Further, 2.3% wage growth is NOT the slowest in 25 years... not by a long shot. The author must mean it's the slowest REALTIVE to inflation. But the inflation measure used is a lousy indicator of trends; it's artificially high because of fuel costs: The PRODUCER price index shot up 10% in the past year, the fastest ever. (You think maybe THAT'S where all the money for wages went?) The core inflation rate has barely budged.

Lastly, "wages" do not include benefits.

Next quarter, suppose the price of gas falls below $2 a gallon, as it expected. The PPI goes down several percent. The consumer inflation rate goes negative, also. And the wage index rises 1.9%. Do you think they'll be talking about the skyrocketing wages, RELATIVE TO INFLATION? No, they'll be saying wage growth is down again.

I readily part company with the Rush Limbaugh and even Alan Greenspan types, and frequently denounce business news reporting which treats wage growth as if it is deadly. But this article is garbage.

[eldoradude]

You hit it right on the head.

[1rudeboy]

Wow, if those 65,000 workers (not all of whom are computer programmers) can make such a dent in our wages, we're in worse shape than I thought.

[cynicom]

Middle class conservatives will not wake up until it is too late and find out their big brothers have led them down the primrose path.

[GSlob]

To tell the truth, I would not call it "rich", just getting to the [a bit lower, but still coveted] status of "person of independent means". But that would be a matter of definitions. The statuses have to be defined independently from time and place. Something along the lines: "rich" - somebody who could afford upper-class lifestyle [whatever passes for it] without having to work for it. Rich could be somebody with two loincloths when everyone else is having one or goes naked.
"independent"-somebody who could afford middle-class lifestyle [whatever passes for it] without having to work for it.
OTOH, one could not have a society with everybody the upper class [or millionaire, or whatever] in it - nobody would be there to drive a septic truck or to flip burgers. Thus such a society would immediately suffer frightening hyperinflation.

[expat_panama]

I would not call it "rich", just getting to the [a bit lower, but still coveted] status of "person of independent means".

Dubya's Chronicle clipping makes a big fuss about wages.  Their idea is that it doesn't matter if Americans are the happiest and the wealthiest in the world --all is lost if salaries are down.  They'd prefer to have us living in miserable squalor as long as we have a nice paycheck.  

My personal definition of 'wealth' includes happiness, which IMHO is the real goal.  From what I've seen, riches (like fame, popularity, health and power) seem to come about as the result of happiness --even though a lot of people vainly strive for the results in the belief it will bring about the cause.  The truth is that happiness simply starts with a conscious decision to be happy, and the rest can follow.

[Sam the Sham]

Has it occured to you that savings come from a paycheck ? And that is why the savings rate is so critically low ?

[Sam the Sham]

So wealth OR happiness ? What kind of pollyana nonsense is that ?

[Moonman62]

It doesn't help that the Federal Reserve will cause a recession every time the market favors the wage earner.

[ThinkDifferent]

Of course, it takes them 9 paragraphs to note that total compensation is rising, although at "just" 3.1 percent.

4.7% inflation doesn't that seem high?

That's way too high for core inflation. They may be counting energy costs, which skew the numbers due to their volatility.

[expat_panama]

wealth OR happiness ? What kind of pollyana nonsense is that...

Absolutely right!   Never ceases to amaze how some people can really get things turned bassackwards.

[A. Pole]

In the aggregate level, only 56 percent of all personal income comes from wages and salaries, with the rest flowing from other sources, such as investments, rent, Social Security and private retirement plans.

Add living off the rising home equity and the wages might be below 50%.

[expat_panama]

4.7% inflation doesn't that seem high?   That's way too high for core inflation. They may be counting energy costs, which skew the numbers due to their volatility.

You got that one right.  

A good rule of thumb in remembering which inflation is core and which includes volatiles is to remember that if the President is Republican and core is going down, then it's the total inflation that makes the headline.

The reverse is true --pundits had to switch back and forth for a while in the '90s when they were trying to explain which one was the 'important' one.

[GSlob]

"So wealth OR happiness? "
As somebody said long ago, the measurement unit for happiness is called a dollar. [see, for example, "I feel like a million dollars!"] Hence both.

[expat_panama]

Add living off the rising home equity and the wages might be below 50%. 

The bean counters like to say rising home value is only an increase of wealth and it really isn't income (!?).   Of course, even without home equity, people's wages are not even 2/3 of total average personal income.

Then again, for people like you and me who live on the Planet Earth, any increase in wealth is income -- so IMHO what you posted was absolutely right.