Wages Stagnating -- Again

[unlawflcombatnt]

Once again, real wages are stagnating. Real weekly wages have generally been declining since October of 2006. February's $281.61/week wages (in 1982 dollars) are $1.00 less than October's $282.61/week. Real hourly wages are also stagnating. February's $8.36/hour (in 1982 dollars) is the same as in November. In fact, the average hourly wage has not increased any in the 3 months following November. Below is a copy of real hourly and weekly wages from the Bureau of Labor Statistics.



Though the media's financial propagandists have been touting how wages have been increasing, real wages have not increased any over the last 4 months. And weekly wages have actually declined over that time. With February's job creation of only 97,000, and 8 straight months of decline in manufacturing jobs, it is no surprise that wages are stagnating. The demand for labor is less than the 150,000 monthly increase in the labor supply. When the labor supply exceeds demand, it puts downward pressure on prices. In this case, that "price" is the wages of American workers.

Big business and Corporate America don't need any more tax cuts to create jobs.
To "create jobs" they need to pay their workers more to increase their spending power. Increased wages increases the spending power of worker-consumers. In turn, increased spending increases production demand. This increases demand for workers to provide that production, increasing employment AND wages.

Investment capital creates NO jobs unless there is an increased demand for the production of goods or services. No one invests money without an anticipated return on that investment. Those returns ultimately come from sale of production or services. Thus, no investment occurs unless there's an anticipated demand for production. That "demand for production" comes from consumer spending. Cheap and plentiful investment capital creates NO jobs, unless there is a demand for the production facilitated by investment of that capital.

Stagnating wages lead to stagnating production demand. Stagnating production demand leads to a stagnation in investment opportunities, which results in decreased true capital investment. Investment capital is abundant at present. Investment opportunities are not. Consumer spending is tenuous at present, especially considering that it's increasingly supported by credit, instead of wages.

We don't need more tax cuts or easing of credit to further increase record levels of available investment capital. We need to increase the spending power of consumers, which creates the demand necessary to provide investment opportunities.

Again, there's no shortage of investment capital.
There's only a shortage of investment opportunities.

unlawflcombatnt

Economic Populist Forum

EconomicPopulistCommentary

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The economy needs balance between the "means of production" & "means of consumption."

[Sherman A1]

1. Great Information!

Thanks for posting the charts... I am of course hopeful that we can see another round of CEO salary increases and bonuses!!!!

[unlawflcombatnt]

2. CEO Salaries

"I am of course hopeful that we can see another round of CEO salary increases and bonuses!!!!"

LOL. Yes, that's exactly what we need.

[Common Sense Party]

3. Damn that Democratic Congress! Get on the ball! n/t

[gravity]

4. They remained stagnat for the past 7 years

when you look at the weekly earnings

[unlawflcombatnt]

10. About $5/week

Over the last 7 years, weekly real wages have increased only about $5/week, or about 1.8%. That's a weekly wage increase of about 0.26% per year. That's certainly not the sign of a strong economy.

[SOS]

5. Up $13 a week after nine years?

This is appalling.

In June 1997 - $264 a week (1982 dollars)
In June 2006 - $277 a week

$13 over 9 years? That's just freakin' ridiculous.

American workers need to become aware that they are being shafted by the Wall Street billionaires club.

[Greyhound]

7. Even worse than that, this is the fourth administration in a row that has skewed the

calculations to hide the real inflation. Of course as in every other instance, arbusto_® is the worst of this heinous lot.

[unlawflcombatnt]

11. Inflation skewed

A report by UBS, the largest Swiss bank, states that inflation is actually higher for the goods purchased by the poor, than by the affluent. Prices for big-ticket items have not increased at the rate of increases for food and basic necessity.

"UBS points out that the effective inflation rate for the poor is higher than that for the wealthy. The poor need to buy a basket of staples which is inflating faster than the norm, while many of the goods purchased by the wealthy are decreasing in price thanks to technological advances. So inequality is greater than the widening gap in incomes implies"

Not only is the government understating inflation, but the stated inflation level is greater for lower-priced items that are purchased by the non-wealthy.

[kineneb]

14. inflation for the poor

I can attest to that. We live on a fixed income, and I get to watch prices go up, while the Big Boys keep telling us "everything is fine." Bullpucky.

Up, since Bush II took office:
gasoline (about 100%)
food (price of meat, dairy have gone 'way up)
utilities (thank you, Enron... not)

Down...
nothing, except my expectations...

[unlawflcombatnt]

8. $3 per week since December 2001

Most of the $13-increase occurred under Clinton. Since December of 2001, the increase has been only $3/week. And that minuscule amount is probably accounted for by increases in high-end wages.

[PsycheCC]

6. Thanks for the update.

Amazing how the talking heads on CNBC keep worrying over "increased labor costs." I guess if corporations share any of their obscene profits with workers, they won't be able to meet their earnings estimates, investment will fall off, stock prices will drop, and CEO salaries and bonuses will reflect that drop in the stock price.

Heaven forbid the rich stop getting richer and the middle class earn enough money to make ends meet. Consumer spending is 2/3's of what drives the economy, so why can't corporate America see the need to pay its workers enough to consume something?

[unlawflcombatnt]

9. "Increased Labor Costs"

"Amazing how the talking heads on CNBC keep worrying over "increased labor costs." I guess if corporations share any of their obscene profits with workers, they won't be able to meet their earnings estimates, investment will fall off, stock prices will drop, and CEO salaries and bonuses will reflect that drop in the stock price.
"

That's exactly what I've been hearing from the likes of Larry "I-lost-my-straitjacket" Kudlow and the other economic comedians on CNBC. It's as if consumer spending and purchase of production are just incidental concerns. Kudlow seems to believe no one ever needs to purchase anything for the economy to keep going. Kudlow thinks if there's enough investment, consumers don't need any income at all. The money to finance spending will just fall out of the sky if wages aren't sufficient to purchase production. CNBC just provides another take on Bush's "faith-based" economy.

[kineneb]

12. whole economy is house of cards, built on cheap credit (not increasing income)

which is about to come due... folks borrowed against their houses, maxed out their credit cards, etc. because their regular wages were going nowhere, and costs continued to go up... now their ARMs are resetting, the credit card interest rates have gone up, and their incomes are still the same... forclosures increase, general purchases decrease (no money), and the economy goes into a death spiral that all the investment income in the world cannot fix...

The rich do not buy enough regular consumer goods to keep the economy going, and the poor are, poor and don't buy much at all. The corporations are killing off their main income source, the middle-class consumer. No point in making stuff if no one can afford to buy it.

Or, as I heard someone on a BBC interview say: the manure is about to hit the ventilator.

---
just the way I'm seeing thinks...

[unlawflcombatnt]

13. Well Put

"and the economy goes into a death spiral that all the investment income in the world cannot fix...

No point in making stuff if no one can afford to buy it."

That's it exactly. Increasing available investment capital does little good if there's nothing to invest in. Jobs are only created when demand for consumer goods and services rises, necessitating the hiring of more workers. Investment capital facilitates job creation, but only if there's sufficient demand for the goods/services those jobs provide.