Over the past three and half years, growth in U.S. consumer spending has averaged a paltry 0.2 percent adjusted for inflation, the weakest in the post-World War II period, Morgan Stanley says...
Over the past year, pay for blue-collar workers adjusted for inflation fell 12 cents from the previous year, according to the Bureau of Labor Statistics. That was the steepest decline since the stagflationary days of 1980.
Pay for all workers has fallen 16 cents this year in real terms. [emphasis added]
Read the rest at The Huffington Post
by Reuters
Morgan Stanley's Stephen Roach sees the balance sheet recession taking years to play out.
1 comment:
OK, here's a problem that a Jobs Guarantee doesn't address-- stagnant wages of the already employed. Certainly hiking the minimum wage would help, I'm a fan of the Universal Living Wage plan to link each metro area's mini. wage to its housing costs.
http://universallivingwage.org/ulwformula.htm
However, minimum wage increases are always phased in over time, the fastest way to do so is by tax policy. Steve Roth has suggested using the EITC as an alternative to cutting payroll taxes. The Domenici-Rivlin deficit commission came up with a similar plan by replacing EITC with a 21% tax credit on the first $20k in income indexed by inflation (FWIW, it'd also boost child tax credits).
IIRC, the average blue collar worker earns around $30,000 a year. So a $4200 pay hike would be an effective 14% raise that'd show up on every paycheck (no waiting till the end of the year for a lump sum EITC refund). Of course, in an economic downturn, the tax credit percentage could be temporarily boosted to sustain AD.
Post a Comment