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Explaining Away Stagnant Wages
Every now and again, the Bush administration or some other booster of the current economy will argue that wages aren't really stagnating, as they appear to be to anyone who looks at the numbers. Rather, workers are just receiving more and more of their compensation in health care benefits.
Trouble is, that's not true, at least not for workers at the very bottom of the ladder. According to the Economic Policy Institute, between 2004 and 2005 the bottom 20 percent saw their wages decline 1.9 percent. Yet only 24 percent of those workers get health insurance through their employer. Basically, health care costs would have had to increase 39 percent during that year for this to be the primary explanation; in fact, it rose 9.2 percent. In reality, there's something badly wrong with an economic "recovery" that has a large number of workers seeing their paychecks shrink rather than grow.
Posted by Bradford Plumer on 04/12/06 at 10:46 AM | E-mail | Print | Digg this | de.licio.us
Comments
Your wages are stagnant because of illegal competition. Specifically you have non-citizens doing your trade work for less. They entered illegally, were hired illegally and supported by unethical social systems at your detriment and the detriment of every hard working American and legal resident alien.
Posted by: don on 04/12/06 at 4:09 PM
There is little that seems to penetrate the current administration about the concerns of real Americans, particularly those earning less than a million dollars a year. It is no surprise that so many Americans do not participate in civic activities, like voting or community actions, etc. We have been conditioned to think that the US government is not willing or able to do anything other than give contracts to influential corporations and reduce taxes for the investing class.
I maintain my optimism mainly out of will to have something in this country to offer my children. Other than that, it's just so hard to believe in the possibility of reform or change.
Posted by: Kiersten Marek on 04/12/06 at 5:01 PM
I'm not sure that illegal immigrants are anything like a primary part of the problem. The US is part of a free trade area in goods, but not labour. So US companies build factories in Mexico, can pay Mexican wage rates, and don't have to worry about the experienced workers getting better-paid jobs on the US side of the border.
Posted by: Dave Bell on 04/13/06 at 4:51 AM
ou should look at this.
Where did the Productivity Growth Go?
Inflation Dynamics and the Distribution of Income*
Ian Dew-Becker and Robert J. Gordon,
Northwestern University
Paper to be Presented at the 81st meeting of the
Brookings Panel on Economic Activity, 2005:2
Washington DC, September 8-9, 2005
Posted by: spencer on 04/13/06 at 9:55 AM
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I think you could probably go a long way toward explaining stagnant or shrinking wages if you looked at the obcene compensation packages that are being given to criminal executive officers.
Posted by: anonymous on 04/12/06 at 12:40 PM