Wage growth lowest in 27 years; minimum wages are bad?

usa wage growth since 1947

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The Labor Department said Friday that wages and benefits rose by 0.5 percent in the three months ending in December. For the entire year, wages and benefits were up 1.5 percent, the weakest showing on records that go back to 1982.

Wages and benefits rise weak 1.5 percent in 2009
Wages and benefits rise in 2009 by smallest amount on records going back 27 years

WASHINGTON (AP) — Wages and benefits paid to U.S. workers posted a modest gain in the fourth quarter, ending a year in which recession-battered workers saw their compensation rise by the smallest amount on records going back more than a quarter-century.

The anemic gains have raised concerns about the durability of the economic recovery. The fear is that consumer spending, which accounts for 70 percent of economic activity, could falter if households don’t have the income growth to support their spending.


A strong economy must be built on a solid foundation of steadily rising wages. If wages are not keeping pace with production, the only way the economy can grow is through the expansion of debt which leads to disaster.

Consider this: the U.S. economy is 72 percent of consumer spending. This means that the gross domestic product (GDP) may rise if wages do not follow with the cost of living. Low Income Families (LOF), that and this is couples making less than $ 80,000, represent 50 percent of all consumer spending. The LOFs spend everything they earn just to maintain their current lifestyle. So how can they help families to grow the economy if they are already spending every last penny until they earn? They can not! This explains why wages should rise. The cost for short-term profits is miniscule compared to the turmoil of a deep recession and that is what the world is facing right now.

usa wage growth since 1947

This is by design, as corporations in a globalized market, are left with 2 choices:
1. bring the world to Western living standards, or
2. Drop the world down to third world status.

Guess which they chose? Indeed, it is much more cost effective to transform the world into a sewer Slave Labor armpit than to raise living standards as a whole. This is not just happening in the United States, European countries, the Nordic region in particular, are thorns in the foot and economically destroyed. If our country is so concerned about China as an economic threat, why do we continue to allow trading whith them and sending our manufacturing base there?

On the other side of the coin, employees can’t be paid a living wage unless the value of their productivity to the employer exceeds the cost. If people can’t find an employer that will pay them a wage they can live on, they need to be asking themselves what they bring to the table when they go to employers. If you have no skills then you have no skills, and legislating higher wages can’t fix this. It just sets a higher bar at which everyone below that bar is unemployable. That’s common sense.

Doesn’t take much thought to realize the minimum wage issue is a circular argument, wages go up, prices go up, politician needs support, wages go up, wages go up, prices go up. The losers are the small business owner who takes the loss during the interm or the low income worker who gets their hours cut or gets layed off till the prices even out. Small business owners already work at least 6 days a week usually 12 hour days. Sometimes you work 30 days or 60 days without a day off, you get no pension, you can’t draw EI, your house is collateral for the loan on the business and then you get some know it all who really hasn’t done anything except complain about everything telling you maybe you should spend more time in your business and that your employees are the only reason you make money.

The Labor Department said Friday that wages and benefits rose by 0.5 percent in the three months ending in December. For the entire year, wages and benefits were up 1.5 percent, the weakest showing on records that go back to 1982.

The 1.5 percent increase in total compensation in 2009 was about half the 2.6 percent increase in 2008 and both years represented the smallest gains for the government’s Employment Compensation Index.

Last year, wages were up by just 1.5 percent and benefits rose by the same 1.5 percent, both record lows. In 2008, wages and salaries had been up 2.7 percent and benefits, which cover such things as health insurance and pension contributions, had risen by 2.2 percent. Read the rest of the article from Yahoo News

4 thoughts on “Wage growth lowest in 27 years; minimum wages are bad?”

  1. Whats not to understand? We no longer produce. We don’t even make our own toilet paper. Our biggest export is content. Most of which is either deceptive news, or who’s getting it on at the office Why would any productive country ex. China look at us with favor? They can out produce us any day of the week. We on the other hand have become a lazy bunch of whining do nothings wanting the government to provide for our every need and expecting $100k salaries. Our government jobs have become breeding grounds for this apathetic work ethic. Is it any wonder business no longer wants to maintain the status quo.

  2. Gene,

    You are very right about China. I lived in South Korea for 1 year and went to China to visit. I saw the horrible industrial towns and such. I spoke to some locals (who spoke broken English) and their working conditions were bad. They out produce the US in just about every way. These economists who say that offshoring of our manufacturing base is a good thing are just corporate/government paid cheerleaders. They would sell their own mothers.

    I’ve had it with north America — it is going down the shit hole. I am moving to Europe.

  3. The resolution to all of this monetary mess is found under the topic: RESOURCE BASE ECONOMY. Google this and examine your intellect and creativity. SEE RBEF OR RESOURCE BASED ECONOMY FOUNDATION.

  4. Hey Jason, USA might be going down the toilet, but Europe isnt that far behind it. I guess you could say this a global problem. The MSM just wont talk about anything too negative about the economy here or over there.

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