Paychecks Lag as Profits Soar, and Prices Erode Wage Gains

By Ronald Horvath | Jul 15, 2018

Are we "great again" yet?

"Corporate profits have rarely swept up a bigger share of the nation’s wealth, and workers have rarely shared a smaller one.

The lopsided split is especially pronounced given how low the official unemployment rate has sunk. Throughout the recession and much of its aftermath, when many Americans were grateful to receive a paycheck instead of a pink slip, jobs and raises were in short supply. Now, complaints of labor shortages are as common as tweets. For the first time in a long while, workers have some leverage to push for more.

Yet many are far from making up all the lost ground. Hourly earnings have moved forward at a crawl, with higher prices giving workers less buying power than they had last summer. Last-minute scheduling, no-poaching and noncompete clauses, and the use of independent contractors are popular tactics that put workers at a disadvantage. Threats to move operations overseas, where labor is cheaper, continue to loom.

And in the background, the nation’s central bankers stand poised to raise interest rates and deliberately rein in growth if wages climb too rapidly.

Workers, understandably, are asking whether they are getting a raw deal.

“Sure, you can get a job slinging hamburgers somewhere or working in a warehouse,” said Christina Jones, 53, of Mobile, Ala. Ms. Jones spent eight months searching for a job with living wages and benefits, after being laid off from a paper company where she had worked for nearly 13 years. Dozens of interviews later, she landed work last month at a concrete crushing company as an accounts payable clerk for $14 an hour — two-thirds her previous salary.

“You hear, ‘Oh, the unemployment rate is as low as it’s ever been,’” Ms. Jones said, but “it was discouraging.”

Businesses have been more successful at regaining losses from the downturn. Since the recession ended in 2009, corporate profits have grown at an annualized rate of 6.5 percent. Several sectors have done much better. On Friday, for example, banks like JPMorgan Chase and Citigroup reported outsize double-digit earnings in the second quarter.

Yearly wage growth has yet to hit 3 percent. And when it does, the Federal Reserve — which has a mandate to keep inflation under control even as it is supposed to maximize employment — can be expected to tap the brakes."

Comments (2)
Posted by: Richard McKusic, Sr. | Jul 16, 2018 05:11

It ain't the money
That will keep us sunny.
It's what's in our heart
That'll keep us from fallin' apart.

Posted by: Ronald Horvath | Jul 15, 2018 18:40

"The United States, one of the world's richest nations and the "land of opportunity," is fast becoming a champion of inequality," the report concluded.

The Trump administration has slammed the UN report, arguing the organization should instead focus on poverty in the third world.

US Ambassador to the UN Nikki Haley said, "It is patently ridiculous for the United Nations to examine poverty in America."

The report, presented Thursday in Geneva, comes two days after Haley announced the US would withdraw from the UN Human Rights Council.

Haley's comment was in response to a letter from Vermont Sen. Bernie Sanders and 18 other politicians calling on the US to "take action to reduce shameful levels of poverty across the country."

They agreed with the report's conclusion that the Trump administration's $1.5 trillion in tax cuts "overwhelmingly benefited the wealthy and worsened inequality."

Philip Alston, a New York University law and human rights professor, led a UN study traveling across US. The group went to Puerto Rico and Washington, D.C. Alabama, California, Georgia, West Virginia were among the states they visited.

"Most Americans don't care about it. They have bought the line peddled by conservative groups that poor people deserve what they are getting," Alston, the UN special rapporteur on extreme poverty and human rights, told CNN. “

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