“The wages of typical workers are treading water, growing roughly at the same rate that inflation eats into their buying power. Last week, the Labor Department reported that average wages for production and nonsupervisory workers in the private sector, about 75 percent of the labor force, reached $16.06 an hour in June, just 2.7 percent above the level a year ago.
Yet in terms of the aggregate effect on the total economy, that statistic does not seem to matter much. Workers’ wages may be barely keeping up, but Americans’ average incomes are growing briskly – in part, because of growth in the overall number of jobs, including Mr. Barnes’s extra one. But it also reflects other forms of income, flowing mostly to the more affluent, which are fueling the consumer spending that has provided a crucial pillar of support for economic growth over the last three years.
“You have a lower half of the wage distribution in the United States that has not experienced any income gains for a long time now,” said Barry P. Bosworth, an economist at the liberal-leaning Brookings Institution. “But from a macro perspective this doesn’t have much impact.”
After falling to a trough of 8.5 percent in 2001, corporate profits’ share of national income soared to 12.3 percent in the first quarter of this year, the highest level since the mid-1960’s. The share of income accruing to workers’ compensation, on the other hand, fell from 66.2 percent in 2001 to 63.9 percent in the first quarter of 2005.”
For those of you who are unfamiliar with this statistic, please commit it to memory:
For the last 5 years, their wages have barely grown. According to the Bureau of Labor Statistics, the average earnings increase from 2000-2004 was 3.86%, 3.22%, 3.12%, 1.71% and 2.39% respectively. However wages have to be compared to inflation to determine the real rate of wage growth. For the same years, annual inflation was 3.4%, 2.8%, 1.6%, 2.3% and 2.7% respectively. When inflation is subtracted from wages, overall wage growth becomes .46%, .42%, 1.52%, -.59% and-.31% respectively for 2000-2004.
At the same time, corporate profits are increasing. In other words, the “trickle-down” effect of supply-side economics is in fact the rich pissing down on the poor.
I should add that I am not a socialist. I am a free-market advocate until the day I die. However, I am also for social justice for spiritual, practical and political reasons. And the reality is the current administration could care less about the working poor.
During the same time, we have seen huge increases in higher-education tuition payments, medical care, medical insurance and increased spending of prescription drugs.