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.
If the slowdown accelerates, better plug your ears because the sound of bubbles popping will get louder and louder...
I think liability reform will help lower production costs and increase pay. As will cutting all federal regultations. And suspending the gas tax is a good move.
That wasn't a rise in job creation. I was a rise in modeling job creation.
Over 90% of this increase is due to the Birth/Death Model.
Can a slowdown accelerate?
WHo's gonna do those things? Not Bush, not the weenies in the "Republican" Senate.
This has absolutely nothing at all to do with massive illegal immigration.
Nothing at all. - Move on.
It's all in the headlines ... and the words you choose.
Real Wages fall = Increasing Inflation
I don't believe you understand the Net Birth/Death Model.
The 257k added by the Model is not just lobbed onto the seasonally adjusted payroll increase that was 274k in April, it is figured in the non-seasonally adjusted increase in payrolls, which was over 1.1 million in April.
I agree. We all know the solutions to our problems. Cut taxes, regulations, drill for more oil, build refinaries, more legal reforms ect. But the RINO's stand in the way. The conservative base is fed up. But how to we get more conservatives in power? I think we need to do what the libertarians wanted to do. Move into Blue states and start electing conservative Senators.
I have been feeling wage pressure.
And suspending the gas tax is a good move.
And who pays to maintain the roads?
The birth/death model also shows an increase of 400k jobs in January. Not a good indicator. The number is what it is.
"And who pays to maintain the roads?"
Why thats easy, the Social Security General Fund does.
The BLS says the number is adjusted monthly.
Yes it is adjusted monthly, but it is not directly related to the seasonally adjusted non-farm payroll figures that are released monthly.
It is more closely related to the non-seasonally adjusted non-farm payroll number that is released monthly.
Did that gal I saw on TV making 50 Grand a year for driving cars off the assembly line,in Detroit, to a parking lot lose her job?
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....
thats where I had to quit reading... 'low wages' wouldn't have tipped the writers bias near as fast
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