yeah..but at least Exxon and Haliburton are makin record profits

[Guest guest]

http://www.counterpunch.org/bernstein10282005.html

 

October 28, 2005

 

Fastest Decline in Real Wages on Record

Inflation Up; Wages Down

By JARED BERNSTEIN

 

Employers' wage costs grew 2.3% over the past year, the slowest

growth rate on record, according to today's report from the Bureau

of Labor Statistics. Factoring in the recent energy-driven increase

in inflation, the real wage is down 2.3%, also the largest real loss

on record for this series that began in 1981.

 

With hourly wages falling in real terms, the only way working

families can raise their incomes is by working more hours-certainly

not the path to improving living standards that we would expect in

an economy posting strong productivity gains.

 

This 2.3% rate is a slight tick down from the 2.4%--the previous

historical low--that prevailed for the last four quarters.

Compensation-wages plus benefits-also grew more slowly in the third

quarter of this year, up 3.1% over the same quarter last year, the

slowest yearly growth in six years.

 

For the first time in this employers' costs report, the Bureau of

Labor Statistics presented these values adjusted for inflation. Both

wages and compensation are losing growth in real terms, down 2.3%

and 1.5%, respectively, as slower nominal wage growth is colliding

with faster inflation. In both cases, these are the largest yearly

real losses on record.

 

This is a broad measure of earnings, including all civilian workers.

It thus reveals an ongoing, important imbalance in this economic

expansion. Overall measures of economic performance, such as gross

domestic product, continue to perform well. For example, real GDP

grew by 3.8% in the third quarter, above expectations and an

acceleration over the 3.3% GDP growth rate of last quarter.

 

Yet the wage and compensation results show that this growth is

failing to show up in hourly earnings. This has two implications.

First, the view that increasing labor costs are pushing up prices is

clearly not supported by these data. There is no evidence of an over-

heating labor market that needs to be cooled by Federal Reserve rate

hikes. Second, the resulting stagnant hourly wages will make it hard

for working families to truly get ahead.

 

Jared Bernstein is an economist at the Economic Policy Institute.

 

 

The propagandist's purpose is to make one set of people forget that certain

other

sets of people are human: Aldous Huxley