posted on April 12, 2005 04:27:04 AM new
CNN 4/11/05, Reports show that for the 1st time in 14 years the American workers wage increases dropped below inflation costs. Causes were outsourcing,energy cost,health care costs and others. The CNN poll below taken 4/11/05 shows what the American people are saying about their standard of living in the last year.
Which best describes the change in your standard of living over the past year?
posted on April 12, 2005 06:39:09 AM new
I don't know about my standard of living but I did get the single biggest percentage raise this year that I have ever received - 23%. So I'm pretty happy - chalk me up with the 5%.
posted on April 12, 2005 06:29:17 PM new
fiset, you don't happen to sell gasoline, do you?
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posted on April 13, 2005 07:43:47 AM new
Most people are not as fortunate as fiset and Washingtonbayer. As basic expenses such as housing, utilities, food, gas, insurance and health care go up, wages are not sufficient.
Wages Lagging Behind Prices
Mon Apr 11, 7:55 AM ET Top Stories - Los Angeles Times
By Nicholas Riccardi Times Staff Writer
For the first time in 14 years, the American workforce has in effect gotten an across-the-board pay cut.
The growth in wages in 2004 and the first two months of this year trailed inflation, compounding the squeeze from higher housing, energy and other costs.
The result is that people like Victor Romero are finding themselves falling behind.
The 49-year-old film-set laborer had to ditch his $1,100-a-month Hollywood apartment because his rent kept rising while his pay of $24.50 an hour stayed flat.
"There's no such thing as raises anymore," Romero said.
This is the first time that salaries have increased more slowly than prices since the 1990-91 recession. Though salary growth has been relatively sluggish since the 2001 downturn, inflation also had stayed relatively subdued until last year, when the consumer price index rose 2.7%. But wages rose only 2.5%.
The effective 0.2-percentage-point erosion in workers' living standards occurred while the economy expanded at a healthy 4%, better than the 3% historical average.
Meanwhile, corporate profits hit record highs as companies got more productivity out of workers while keeping pay increases down.
Some see climbing profits and stagnant wages as not only unfair but also ultimately unsustainable. "Those that are baking the larger pie ought to see their slices expanding," said Jared Bernstein, an economist with the liberal Economic Policy Institute in Washington.
But higher wages could hurt the economy by stoking inflation further. Employers might pass the costs on to consumers in higher prices, and that in turn might prompt the Federal Reserve to raise interest rates more aggressively, possibly slowing the recovery or even triggering a recession.
For now, workers' wallets are being pummeled by something of a perfect storm of economic forces: a weak job market, rising health insurance premiums and other inflationary pressures.
The biggest factor is the slack employment market, which means there is little pressure on businesses to boost pay. "They take advantage of you because there's no work and anyone will work for anything," Romero said.
Although the unemployment rate has dropped to a relatively low 5.2%, that figure doesn't count the hundreds of thousands of jobless people who've given up their searches and dropped out of the labor market at a greater rate than anytime since 1988. At the same time, the cost of health premiums has skyrocketed, eating into the pool of corporate cash set aside for raises. Although pay rose only about 2.4% last year, benefit costs jumped almost 7%.
With benefits factored in, workers' total compensation did outpace inflation in 2004, even if they didn't see it in their paychecks. But employers also are requiring workers to pay a greater share of their premiums.
"Healthcare has eroded the wage base," said Janemarie Mulvey, chief economist with the Employment Policy Foundation, a business-funded think tank in Washington.
"In the long run, we can't continue like this. If healthcare keeps crowding out wages forever, something's got to give."
The squeeze is especially intense on the 47% of the workforce whose employers don't directly provide their health insurance. For lower-income workers, who are more likely to be uninsured, the falling value of their wages is even more serious because they're more likely to live paycheck to paycheck. And rising food and energy prices take a proportionately higher toll on the poor than on the rich.
Historically, periods when wage growth is outpaced by inflation rarely last more than 18 months. That's partly because businesses don't want their employees' living standards to fall, as that injures morale, said Trewman Bewley, a Yale University economist who has studied wage activity during economic downturns.
Many economists figure it's only a matter of time until workers can pry more money out of their employers to catch up to inflation again. If economic growth remains robust, as many forecasters predict, workers may gain greater leverage to negotiate wage hikes.
"Chances are that those workers that have problems getting by because of higher fuel prices will probably tell their employers, 'I can't make it,' " said John Lonski, chief economist at Moody's Investors Service.
That hasn't played out for Brian Chartier. The 29-year-old Glendale resident handles inventory for a Los Angeles manufacturing company. No one there, he said, has gotten a raise in two years.
"They're able to do this and I haven't quit, because where am I going to go?" he said. "There are no jobs."
While his salary remained flat, rising healthcare premiums kept eating up more and more of Chartier's take-home pay, so he dropped out of his employer's insurance program. His rent is also climbing.
As Chartier loaded bags of groceries into his Honda Civic last week, he boasted that they were full of bargains. "I don't get a single thing that's not on sale," Chartier said. "I can't afford to anymore."
Despite the failure of their wages to keep pace with inflation, American consumers have kept shopping. Consumer spending has continued to rise. Analysts say that's partly because some shoppers are thinking less about their paychecks and more about their biggest asset: their homes.
Home prices rose 21.1% in Southern California and 9% nationwide from February 2004 to February 2005, sheltering consumers, and the economy, from much of the pinch of higher prices.
"There's been a wealth effect afoot throughout much of the recession and the recovery," said Bernstein of the Economic Policy Institute, "because no matter what people's incomes were doing, their wealth was improving — their biggest assets, their homes, were accruing."
As inflation sparks higher interest rates, most economists expect the housing market to cool, making shoppers more dependent on their paychecks. And even those who have seen their paper wealth rise phenomenally aren't happy about rising costs and stagnant pay.
Corina Swatz has seen the value of her Silver Lake home triple in about a decade. But neither she nor her husband has gotten a raise in more than a year. Meanwhile, gas prices have forced them to shell out $55 to fill the tank of their Chevy Tahoe.
"I used to spend $600 a month [on groceries]. Now I spend $800," Swatz, a mother of two, said as she made her weekly Costco run last week. The increased value of her home gives her only so much solace. "We're hanging in there."
The danger is that people like Swatz, despite their home equity cushion, may pull the rug out from under the economic expansion by reining in their spending.
That's what Gabriel Torres has done. The 56-year-old cook, who lives in Hollywood, hasn't gotten a raise in years but pays ever-higher prices to fill his Nissan Xterra. He and his wife have come up with a solution: Cut down on driving.
"We don't go out much," Torres said. "We used to. But now we only drive when we really have to."
posted on April 13, 2005 08:48:31 AM new
Here are the calculations for this poor laborer.
The 49-year-old film-set laborer had to ditch his $1,100-a-month Hollywood apartment because his rent kept rising while his pay of $24.50 an hour stayed flat.
$24.00 an hour is a great salary for anyone other than the people living in California. It is not his salary that is low is that his apartment rent is high. It is the owner of the apartment building that is doing that to this person. Well not really, I think this person overspends. If he can't live on that.
The 49 year old film-set laborer makes $196.00 a day that is $5,000 a month and $60,000 a year. Now tell me how poor he is. He probably also works overtime as you can tell by his profession, then he makes double time probably. You need to also include that he no doubt belongs to a union and has full benefits. He pays less apartment rent per year per his salary then my husband and I do. We pay $7,200 a year with a yearly income of $25,000, and we are not complaining. He pays $13,000 a year and makes $60,000.
Working in the health field the number of years that I did I never saw more than a 3.5% raise. This man is lucky maybe he should find another apartment.
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[ edited by Libra63 on Apr 13, 2005 10:01 AM ]
[ edited by Libra63 on Apr 13, 2005 12:59 PM ]
posted on April 13, 2005 08:50:09 AM new
Three of us in this household work. I have two jobs plus eBay. Between the mortgage, the gas bill, the gasoline bill and the other utilities we barely get by. Ken makes really good money and so does my son. However, they don't make enought to keep up with soaring gasoline or heating fuel costs. Our gas bill is $1,000+ for just two months and that's keeping the thermostat at 68. Not exactly warm.
The cost of produce in the grocery store is unbelievable. We love asparagus, but at $3.49/pd forget it. Meat has also gone up.
If you are lucky enough to make more than enough money to get by, good for you. However, you are in the minority.
Thankfully, warmer weather is here and we can use our bikes more. It's healthier, but not exactly a convenient way to travel.
posted on April 13, 2005 09:20:47 AM new
Cheryl, re produce. I was thinking that myself the other day. I paid around 2.79 for two stupid tomatoes. And they werent that big. Looked at the receipt and I'm thinking to myself, here I am trying to sell hard to find stuff for .99 cents?? Whats wrong with this picture?. Then 3.00 something for a bag of potato chips, or a box of ritz crackers!
posted on April 13, 2005 10:10:42 AM new
Cheryl sometimes you can pick your own asparagus. I know in Wisconsin there is wild asparagus but I don't know about where you live. It is hard to find and when people know about it they try and keep it secret. Around here it is found near railroad tracks.
Since they had those hurricanes in Florida produce has been really high. Soon it will be summer time and then I guess it is grow your own and sometimes that doesn't work either.
Now I wonder what will happen. A lot of land in our area that was used for farming is now going for sub divisions. I wish there were restrictions or zoning that could stop those sub divisions because soon the farm land will be gone. I can't imagine this area can attract all those people. We are in the highest unemployment in the state but still those $200.00 homes are being built. Farmers are selling their land for high prices and I don't blame them but what will happen when the farms are gone.
No wild asparagus here. I live in the city. We have all the dandilions we want, but not asparagus. I'm thinking of planting a veggie garden this summer.
I think I remember you saying you lived in an older house. If that's right there might be some things you could do to the house (insulation type things) that could lower your fuel bills.
I can't remember exactly what it's called - but you can get your gas company (at least the one in my area does it) to send someone out and looks for energy inefficiencies in your house. Some fixes might be too expensive to be practical, but sometimes even little things like having heavier drapes at drafty windows can make a difference.
posted on April 13, 2005 12:17:01 PM new
Ken laughed at me in the fall when I put heavy plastic up over all the windows. Paid off. The house is not only old, but it is quite large with a three room inlaw suite built onto the back of the house. That whole area is unheated. That inlaw suite makes this a 10 room house. Ten small rooms. We replaced the doors with steel and sided the house so that cut down on the heat loss as well. The cost of heating fuel has just skyrocketed. Dominion East Ohio has got to be one of the worst. To make matters even worse, we have First Energy for electric since Cleveland Public Power isn't taking on any more customers. First Energy is a huge rip off.
posted on April 13, 2005 12:55:46 PM new
Cheryl - Asparagus is found by railroad tracks out in the country. Sometime when you go for your bike ride and you go over railroad tracks stop and take a walk down them for a couple of blocks and just take a look.
When you plant asparagus it takes two years to get a crop. The first year you don't eat it. That was some information I got when I worked at the garden center. The plants should be at your garden center soon. Just think your own asparagus instead of paying the high prices. I understand that and Steins sold alot of asparagus plants, infact they sell out every year. Don't forget the tomatoes when your there.
posted on April 13, 2005 02:03:00 PM new
Railroad tracks, now that's interesting. We ride bikes in a place called Peninsula and cross over old railroad tracks. I'll have to keep my eyes open. Thanks.
posted on April 13, 2005 03:36:40 PM new
" Cheryl, re produce. I was thinking that myself the other day"
why would you want cheryl to reproduce??
I see you were thinking about that yourself the other day..."classic" is available.
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Baseball season has started,but they have it all wrong.3 strikes and you're out,4 balls you walk.I can tell you right now a man with 4 balls could not possibly walk
posted on April 13, 2005 04:59:43 PM new
"Three of us in this household work. I have two jobs plus eBay. Between the mortgage, the gas bill, the gasoline bill and the other utilities we barely get by."
well cheryl-thats what you get for being a democrat.Ya notice all the republicans in here are doing well...what does that tell ya??
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Baseball season has started,but they have it all wrong.3 strikes and you're out,4 balls you walk.I can tell you right now a man with 4 balls could not possibly walk
posted on April 13, 2005 05:11:03 PM new
"We are in the highest unemployment in the state but still those $200.00 homes are being built."
Two hundred dollar homes??? I can just imagine what they look like
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Baseball season has started,but they have it all wrong.3 strikes and you're out,4 balls you walk.I can tell you right now a man with 4 balls could not possibly walk
posted on April 13, 2005 06:08:53 PM new
Classic Next time I had better look after I post. But when the granddaughter poops I have to run, if you know what I mean. They are $200,000.00 houses
Probably quonset houses. Remember them
_________________
posted on April 13, 2005 06:25:21 PM new
"But when the granddaughter poops I have to run, if you know what I mean."
What? in the other direction?
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Baseball season has started,but they have it all wrong.3 strikes and you're out,4 balls you walk.I can tell you right now a man with 4 balls could not possibly walk
posted on April 14, 2005 11:08:11 AM new
come on down to Texas,not only are our watermelons bigger and better,we also have cheap labor and cheap produce .
Mangos and papayas from Mexico,canned white asparagus from China for under 2 dollars a large can.
My auto insurance went down,my homeowner insurance stays the same and my gas bill goes up as I cook too much.
clothes?who wears clothes??
houses are cheap and getting cheaper ,lots of people selling their houses !
you can get a nice house for under 100k .
-sig file -------
Eat grass,kick ass,never go belly up!
posted on April 14, 2005 01:15:51 PM new
" come on down to Texas,not only are our watermelons bigger"
yea I heard the females in texas had big mellons.Of course everything is bigger in Texas
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Baseball season has started,but they have it all wrong.3 strikes and you're out,4 balls you walk.I can tell you right now a man with 4 balls could not possibly walk
posted on April 14, 2005 02:11:58 PM new
Tara Reid is not a Texan,Farah Fawcett never have a boob job.
-sig file -------
Eat grass,kick ass,never go belly up!
