Green Energy
Investors Business Daily:
10-Year Real Wage Gains Worse Than During Depression
By JED GRAHAM
The past decade of wage growth has been one for the record books — but not one to celebrate.
The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economywide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation).
Two years into the recovery, and 10 years after the nation fell into a post-dot-com bubble recession, this legacy of near-stagnant wages has helped ground the economy despite unprecedented fiscal and monetary stimulus — and even an impressive bull market.
Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.
To put that in perspective, since the Great Depression, 10-year gains in real private wages had always exceeded 25% with one exception: the period ended in 1982-83, when the jobless rate spiked above 10% and wage gains briefly decelerated to 16%.
There are several culprits, of which by far the biggest has been the net loss of 2.7 million private nonfarm jobs since March 2001. (Government payrolls rose by 1.2 million over that span.)
That excess supply of labor has given employers the upper hand in holding back wage gains.
Then there is a dramatic, decade-long job shift that has occurred. The often higher-paying goods-producing sector, including construction and manufacturing, has shed 26% of its workers. Meanwhile, typically lower-paying service industries have kept growing their payrolls: social assistance (41%), nursing homes (21%), leisure and hospitality (10%).
"To the extent you have more hotels and fewer manufacturing jobs," the changing composition of the work force has been a negative for wage growth, said John Silvia, chief economist at Wells Fargo Securities.
Behind this job shift is the globalization of production, which has fed "the substitution of capital for labor" amid a push for productivity and competitiveness.
"Brain, not brawn, is required" for today's high-skilled factory jobs in the U.S., Silvia said.
A third trend is the increase in nonwage compensation — fueled by the growth of tax-free health care spending — which has eroded real wage gains.
A fourth factor, rising food and fuel prices, has taken a bite out of real wage growth in the past year.
The long dry spell for real wage gains tests the natural resilience of America's consumer economy.
-
"Forward" - 40% of Americans Now Make Less Than 1968 Minimum Wage From Will at THE OTHER NEWS: "Forward" - 40% of Americans Now Make Less Than 1968 Minimum Wage.(BLN).You may have seen charts like the one to the right from the Economic Policy Institute,...
- Making An Increase A Decrease
Newsmax: Stubborn Unemployment Claims Suggest Slowdown in Job Creation The number of Americans claiming unemployment benefits for the first time fell only slightly last week, dampening hopes of a pick-up in job creation in April after March's slowdown....
- An Historically Low Level Of The U.s. Population Is Actually Working
From the American Enterprise Institute, which is certainly no Obama love fest, but the data comes from Obama’s US Dept of Labor….The big March jobs miss — and why the real unemployment rate sure ain’t 8.2%By James PethokoukisApril 6, 2012, 10:10...
- The Sad Irony
(Hat tip to Reliapundit for the graphic in this post) The facts about jobs related to tourism:Obama touts low-wage tourism jobs, nixes high-wage energy jobs A day after President Barack Obama nixed up to 20,000 high-wage Keystone XL pipeline construction...
- Sigh
(updated at bottom) Workers unemployed 27 weeks or more jumped to 6.2 million or 45.1% of all unemployed workers while the median number of weeks unemployed increased to 22.0 weeks and the average stay on unemployment surged to 39.7 weeks, a new high...
Green Energy
Investors Business Daily:
10-Year Real Wage Gains Worse Than During Depression
By JED GRAHAM
The past decade of wage growth has been one for the record books — but not one to celebrate.
The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economywide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation).
Two years into the recovery, and 10 years after the nation fell into a post-dot-com bubble recession, this legacy of near-stagnant wages has helped ground the economy despite unprecedented fiscal and monetary stimulus — and even an impressive bull market.
Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.
To put that in perspective, since the Great Depression, 10-year gains in real private wages had always exceeded 25% with one exception: the period ended in 1982-83, when the jobless rate spiked above 10% and wage gains briefly decelerated to 16%.
There are several culprits, of which by far the biggest has been the net loss of 2.7 million private nonfarm jobs since March 2001. (Government payrolls rose by 1.2 million over that span.)
That excess supply of labor has given employers the upper hand in holding back wage gains.
Then there is a dramatic, decade-long job shift that has occurred. The often higher-paying goods-producing sector, including construction and manufacturing, has shed 26% of its workers. Meanwhile, typically lower-paying service industries have kept growing their payrolls: social assistance (41%), nursing homes (21%), leisure and hospitality (10%).
"To the extent you have more hotels and fewer manufacturing jobs," the changing composition of the work force has been a negative for wage growth, said John Silvia, chief economist at Wells Fargo Securities.
Behind this job shift is the globalization of production, which has fed "the substitution of capital for labor" amid a push for productivity and competitiveness.
"Brain, not brawn, is required" for today's high-skilled factory jobs in the U.S., Silvia said.
A third trend is the increase in nonwage compensation — fueled by the growth of tax-free health care spending — which has eroded real wage gains.
A fourth factor, rising food and fuel prices, has taken a bite out of real wage growth in the past year.
The long dry spell for real wage gains tests the natural resilience of America's consumer economy.
-
"Forward" - 40% of Americans Now Make Less Than 1968 Minimum Wage From Will at THE OTHER NEWS: "Forward" - 40% of Americans Now Make Less Than 1968 Minimum Wage.(BLN).You may have seen charts like the one to the right from the Economic Policy Institute,...
- Making An Increase A Decrease
Newsmax: Stubborn Unemployment Claims Suggest Slowdown in Job Creation The number of Americans claiming unemployment benefits for the first time fell only slightly last week, dampening hopes of a pick-up in job creation in April after March's slowdown....
- An Historically Low Level Of The U.s. Population Is Actually Working
From the American Enterprise Institute, which is certainly no Obama love fest, but the data comes from Obama’s US Dept of Labor….The big March jobs miss — and why the real unemployment rate sure ain’t 8.2%By James PethokoukisApril 6, 2012, 10:10...
- The Sad Irony
(Hat tip to Reliapundit for the graphic in this post) The facts about jobs related to tourism:Obama touts low-wage tourism jobs, nixes high-wage energy jobs A day after President Barack Obama nixed up to 20,000 high-wage Keystone XL pipeline construction...
- Sigh
(updated at bottom) Workers unemployed 27 weeks or more jumped to 6.2 million or 45.1% of all unemployed workers while the median number of weeks unemployed increased to 22.0 weeks and the average stay on unemployment surged to 39.7 weeks, a new high...