Why Americans' paychecks are shrinking
Companies' tax dodges result in the biggest drop in wages since the 1940s, and the numbers may be a sign of things to come.
Mark Gongloff at The Huffington Post points out that first-quarter data from the Bureau of Labor Statistics, released Wednesday, showed a 3.8% drop in average hourly pay for workers not employed on a farm.
That's the biggest quarterly drop since the bureau started keeping track of such things in 1947, and it takes a big bite out of that feel-good 9.9% boost in hourly pay that occurred in the fourth quarter of 2012.
That collective raise came as employers attempted to dodge fiscal cliff and sequester tax hikes, and the latest drop is just more bad news for employees. Hourly pay has grown by an average of 2% a year for the past four years, the weakest four-year stretch on record. Last year's 1.9% boost was the third-weakest ever, outdoing only the 1.4% gain at the start of the recession in 2009 and a 1.8% gain in 1994.
While that's boosting profits nicely, it's not doing a whole lot for employee productivity. Employees' output, per hour worked, rose 0.5% in the first quarter, according to the BLS, but it was still weaker than the 0.7% gain for all of 2012 or the 0.6% boost in 2011. All of that is way off the track of 3% average annual gains in both 2009 and 2010. But that's OK. Even when production was up, the Organisation for Economic Co-operation and Development says, productive economies stopped boosting worker pay a while ago.
As for the future, don't expect miracles. Even college graduates have seen their average pay decrease by $3,200 since 2000, and 284,000 of them are just grateful to be making minimum wage. While weaker productivity may mean employers will start hiring again now that they've bled their current workforce for all they can, there's nothing about the trends of the past half-decade to indicate free spending or job creation. The layoffs may be over, but there's no hiring. Unless you want to contribute your paycheck to a Kickstarter fund for a new co-worker, embrace the stagnation.
This will not stop until only there is no middle class left.
You will either be rich or poor. No in between.
Meanwhile Corporate America is paying more only to the top Executives while telling the rest of us, take a lot less and be happy. Some posters are happy about that. The Majority of workers are tiring of this do More for Less. They are tired because it has been going on for over a decade. Times folks grow the stones and do something about it.
This is a simple matter of supply and demand. There’re a lot of unemployed people which means there’s a large supply of labor for sale. There are very few companies hiring which means there’s small demand for that labor which makes the price of labor decrease.
To make matters worse not only are wages low the cost of benefits, especially health insurance, are increasing rapidly. This means workers are taking a de facto pay cut as they’re taking home less this year than they did last because of the huge increase in the cost of insurance.
The great Republican Ronald Reagan, said in a nationwide speech, the US is going to be a service economy. I may have been the only person in the US, that was upset, about that statement.
Now as Reagan predicted, we have a service economy, our mfg. jobs are gone. How many of you complainers, were in Seattle, in the nineties, when only a few union people were protesting?
How many of you complainers, were in Miami, protesting, when another great Republican GWB, passed free trade with Central America? Or more recently the one law, that the Republicans and Obama agreed on, free trade with Korea, Columbia and Panama. Americans are like a bunch of sheep being led to slaughter, and are to ignorant, to see what is really happening.
But the market is up today so joy-joy. As an old retired fart I feel for those watching their wages drop or stagnate. Our fixed interest savings income has been flushed down the toilet. Thought we had retirement well planned but it seems that was only a dream.
I do hope that things improve for those looking for work and those currently in the job market. Just re-think your retirement plans because it's easy to have the rug pulled out from under you.
Welcome to the one world Government, where you do as we say and not as we do!
Corporations are sitting of RECORD Amounts of Cash and Profits. Yet not a word from the daily Obama haters concerning how those Large Balance sheets only going to the top affects the rest of us in the Working Population. Not a mention that a Corporation can and will do a $50 Billion dollar buyback of stock but can't Give Workers a Raise. Have the haters ever thought that when Workers Make More, they Buy More, growing the Economy. WE will never have a real recovery as long as those at the Top Hoard all the profits made from the workers at the Middle and near the bottoms only for themselves.
Top Executive pay however in this same 4 year span has increased 272% to all time highs! And economists will have you believe its better to give them the money because they will put it in the bank which allows banks to loan it out for economic expansion even though there may not be a need to expand their business because the demand for their products or services arent there.
HOWEVER if you give that money to the workers they spend it which means the economy is expanding and profits are increrasing which means more people need to be hired which means a recovery.
SO.. as the same as stars...keep shrinking peoples pay and like a compressed star..we will explode!
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[BRIEFING.COM] The S&P 500 trades lower by 0.1% with one hour remaining in today's forgettable session.
Today's economic data was limited to the weekly MBA Mortgage Index (+2.8%), but tomorrow will be a bit more busy, featuring the second estimate of Q2 GDP (Briefing.com consensus 2.0%), the Pending Home Sales report for July (consensus 0.5%), and weekly initial claims (consensus 302K).
Elsewhere, Treasuries are on their highs with the 10-yr yield down four basis points at ... More
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There's a place to express your views about politics, but it's not with your core retirement savings.
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