Monday, May 13, 2013

1st Quarter Salary Raises Fail to Keep Up with Cost Increase

Rising costsThis continues our periodic review of wage, salary, and costs of living expenses

Gus worked as a truck driver for a grocery conglomerate. The company failed to give salary raises for 8 years. Instead, they awarded their drivers a lump sum bonus each year. The bonuses not only never increased in seven years, but decreased by $1,000 in the 8th year. Gus and 9 others asked for salary increases. They quit when the company declined.

Results of Recent Studies Bode Ill

Most Americans don’t enjoy the prosperity and growth in the American economy. Paul Davidson and John Waggoner published Profits don’t flow through to wages in the May 6 edition of USA Today. They wrote

“Hourly wages ticked up 4 cents in April to an average $23.87, rising at about the same tepid 2% annual pace since the recovery began in mid-2009.

But taking inflation into account, they're virtually flat. Workers who rely on paychecks for their income have been running in place, financially speaking. Adjusting for inflation, an average worker who was paid $49,650 at the end of 2009 is making about $545 less now — and that's before taxes and deductions.”

These figures become even scarier when you consider that the average American worker pays more on health insurance premiums now than in 2009—and those costs, with others, will increase in the next three to four years.


Companies Not Passing Profits to Employees Hurts the Economy

Davidson and Waggoner continue

“We're not seeing the living standard growth of American workers that we should be seeing," Shierholz says.

Stagnant wages also hurt consumer spending. Low- and moderate-income workers typically spend nearly all of their paychecks, juicing the economy, while high-income workers tend to save a significant portion, says Dean Baker, co-director of the Center for Economic and Policy Research…

Consumer spending, which has been growing at an average annual rate of about 2% during the recovery, would be rising by 2.5% if employers simply passed their productivity gains onto their workers, Zandi says.”

Wednesday we will discuss the impact of the Affordable Healthcare Act on weekly work hours

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