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Wages in US show steepest fall in rate since 1991
Financial Times ^ | 5/11/05 | Christopher Swann

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.

TOPICS: Business/Economy; Culture/Society; Front Page News; Government; News/Current Events
KEYWORDS: economy; inflation; jobs; realwages; wages
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To: B4Ranch

Big business has spent 148 million to get CAFTA passed. Think of the 7 million for NAFTA in comparison. We are heading right for a $700 billion deficit.

Fiscal responsibility is a class the Bush Administration skipped

Business shouldn't be forced to defend their rights. They are just trying to be free to practice business without governemnt tyrannical interference. They are paying to be left alone - hmmm, a bit like the mob huh? 'protection'. I hope they spend whatever it takes to get our freedom back. And I agree Bush has a tarnished domestic legacy on spending, but this doesn't ahve anything to do with that.

61 posted on 05/12/2005 7:24:22 AM PDT by traviskicks (
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To: LRoggy

Hmmm... bucking history a little bit here. Carter is certainly worse than Hoover, who was a great man that has been unfairly tarred by revisionist rat history. I would say that Wilson was an awful president, but he did successfully prosecute a world war, and he didn't really fall apart until he had the stroke. Taft wasn't too great, but face it, it was hard to cause the same kind of damage in the 1900-10s that Carter did in the 70s.

I think you'd have to go back to Grant to find a potential worse president than Carter and an exemplar of the old bromide that great generals make lousy presidents.

62 posted on 05/12/2005 7:43:51 AM PDT by johnb838 (Free Republicans... To Arms!)
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To: johnb838

The way liberal historians have highjacked history, I would be wary of making the claim without first hand knowledge. Since none of us were alive then, I stick with my first opinion.

63 posted on 05/12/2005 8:05:27 AM PDT by LRoggy (Peter's Son's Business)
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To: A. Pole

And people will be making glass dishes, stainless vessels, HVAC personnel maintaining facilities, new buildings need built, brochures need published....... You have a "multiplication" affect. How many people actually work on cars or are in the automotive industry vs. how many actually work for a car manufacturer?

Look at the RAND studies and what they foresaw as a "computer". According to them just 45 years ago people would never have real "Personal Computers" and the industry should have never have grown to what it is today. Think about the implications of genetics from plastic manufacturing to agriculture, from medicine to defense. Another example besides IT is Aerospace. Go back to 1904 and then just go to 1954.

And genetics is just “ONE” example. If I knew all the market niches and what will work and what not, I wouldn’t be sitting here and writing you this. Yet, history has shown this trend to be true. Horse drawn buggies were once a big deal. Today this industry is fairly dead.

MOST people alive today work in jobs or industries that didn’t even exist 100 years ago. We take our jobs for granted, and see our world very static because our lives are relatively short and we grew up with much of the technology we have. The automotive, aerospace, IT, radiologist, chemo technician, cell phone manufacturers………industries or jobs, didn’t really exist just 100 years ago.

This is why it is important that our government sets the conditions for R&D, test and evaluation; that the “Legal framework” allows for emerging technology to flourish. If you’re like the Germans and all but “ban” genetic engineering, obstruct nuclear power, create laws so restrictive environmentally…….etc, you end up with an economy that is declining. It sounds corny, but it is true. These are long term trends and if we want to “matter” and enjoy our wealth 50 years from now we need to stay with the program. Don’t ban “stem cell research”. Allow it, just control it and set well defined (unambiguous) logical (that make sense) and enforceable (measurable) ethical standards. Whipping out a hatchet and chopping randomly at things, in the name of ethics or environmentalism, in reality just to gain some political objective is detrimental to our economic future.


64 posted on 05/15/2005 10:50:49 PM PDT by Red6
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To: LRoggy
an interesting fact: two-thirds of all the people that have ever lived past the age of 65 are alive today

I do not think that it is true. BTW, go to some old cementary XIXc or older and see how long people lived then. You will see MANY above 65.

65 posted on 05/16/2005 6:19:32 AM PDT by A. Pole ("Truth at first is ridiculed, then it is violently opposed and then it is accepted as self evident.")
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To: A. Pole

That fact is from the speeches of Ken Dychtwald, America's foremost expert on the age bubble (baby boomers) and its effect on financial planning. He last mentioned it about three weeks ago on Wall Street Week on PBS.

You can see more about this at

I am with Northwestern Mutual and he presented to us at our 2003 Annual Meeting. It was very informative in guiding us towards the changes coming in our practices.

66 posted on 05/16/2005 8:25:35 AM PDT by LRoggy (Peter's Son's Business)
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To: LRoggy
That fact is from the speeches of Ken Dychtwald

I have no idea who this Dychtwald guy is, but I have visited old cemeteries and have seen the dates of births and deaths. Go see for yourself.

67 posted on 05/16/2005 6:17:31 PM PDT by A. Pole (Heraclitus: "Nothing endures but change.")
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To: LRoggy
Tax receipts are booming...That is a far more accurate link to incomes.

Not hardly.

Unless you are an economic central planner in the employ of the government or central bank.

Using tax revenue is meaningless because of the top heavy income and therefore tax burden distribution.

Same goes for the statistic generally cited by govt economists -- "per capita income" to tout the health of the economy.

Such numbers would mean something only if income distribution was uniform.

Fact is that real (inflation adjusted) wages for non supervisory employees have declined steadily since 1971. Non supervisory employees comprise 80% of wage earners. Source = US Bureau of Labor Statistics.

Coincidentally 1971 is when trade as a percent of GNP exceeded 14%.

68 posted on 05/31/2005 2:50:48 AM PDT by NMC EXP (Choose one: [a] party [b] principle.)
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To: ninenot
Stagflation brought to you by the Fed.


69 posted on 05/31/2005 2:55:02 AM PDT by tm22721
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To: Tumbleweed_Connection
Wages are lower because employees are VOLUNTARILY electing to put the difference into personal retirement programs.

I don't know if it's the early hour or the lousy coffee I'm drinking but I just can't make any sense out of the above. I'm trying, I really am.............

PS.......I'm not trying to start a food fight ;-)

70 posted on 05/31/2005 3:20:49 AM PDT by varon (Allegiance to the constitution, always. Allegiance to a political party, never.)
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