Saturday, August 04, 2007
Wage growth in the current economic recovery has been unusually weak. The real average wage for rank-and-file workers actually fell from the start of 2002 to late 2006, despite solid economic growth. As job growth picked up, wages surged in the second half of last year before falling back this year.
The recent moves to increase the minimum wage have predictably made little impact on this, since the raise is gradual and small, and affects only 1.25m workers. What's more, for a full time worker on the new rate of $5.85 an hour, as this report points out, there will still be huge problems meeting bills. American capital is obviously anxious to see how far it can go, since at some point there's the prospect of a massive wage-free work-force, as in Mexico, but the reports in the business press do indicate some concern that it aggravates the economy's weakness to have a population that can't pay for the stuff they sell, especially since the record debt levels are no longer sustainable due to the collapse of the housing market. So, what are they going to do about it? Oh, probably demand another tax cut, hope for rising unemployment to further discipline the workforce, hire retainers and repo men, and ride out the storm.