“Wage Growth” Is An Oxymoron In Today’s Economy (But No Politician Will Say It)

Wages GraphCanada is now officially in recession. Though unpleasant, that’s honest. The U.S. is officially in politics instead, which isn’t honest. For too many people though, hard to tell the difference.

Eyeball the graph up top, please, It shows the percentage of the U.S. Gross Domestic Product (the total output of the U.S. economy) represented by employee earnings over time. You’ll note that the line declines; that means that employees have been earning less of the economic output. Labor in other words, is being paid less than it once was paid. These records are kept by the U.S. Federal Reserve.

So the public dialogue is all about improving employee earnings, right? But the reality is the opposite. We’re not of course, supposed to notice the discrepancy. Our politicians speak of raising minimum wages while importing cheap illegal laborers. And via H – 1b visas, cheap legal ones. Watch what they do, not what they say.

Wal-Mart recently made headlines with a voluntary recent increase in its minimum wage and it is now engaged in reducing worker hours at some of its stores. HP is reducing its payroll by offering its workers a choice: Layoff, or transfer to work for an HP contractor.  Contract pay is reported at ‘about half’ of HP pay. World wide enterprises, what those erstwhile American corporations have become, want to pay competitive wages, not U.S. wages that can’t compete in the wider world. And such employers are the folk that fund politicians. If we have not noticed that, the politicians have noticed.

You’ll note that the big unions have vanished with the big industries when the latter went to India and China and Mexico. The big unions are now the government workers, which is why they are paid more than the private sector these days. They still receive pensions while private sector folk must make do with 401k plans. Again, we’re not supposed to notice. The taxes needed to keep that up though; those are hard not to notice. We’d notice more if so much of the spending weren’t borrowed and waiting repayment. When that starts, we’ll notice.

Now that technology has morphed the world into a single economy, high wages in one place with low wages in another are unsustainable. The work -jobs- simply move to the lower wage place: basic economics. That means that the previously high wages must fall to the world average. Sorry about that …

American and European politicians know that; they just won’t be reelected saying it. Instead, they fake it and import cheap illegals on the quiet. They have to reduce American wages. And European of course.

There’s an alternative: America and Europe could push ahead providing goods and services that the rest can’t provide yet. That’s how the West got rich in the first place. It invented mass production and sold cars to the world that couldn’t make cars. Yeah. But our leaders have decided that such an approach is unfair exploitation, so they forbid us to pursue it. Instead, we will all be poor together. Resigned poverty somehow beats go get ’em ambition nowadays. Who knew?

But that must be right; we keep reelecting those leaders, do we not? Listening to what they say instead of watching what they do. Another notable thing that they do now, is making themselves all millionaires, too.  Have you noticed?

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About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Economics, Government, Politics and tagged , , . Bookmark the permalink.

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