Declining Wages
July 25, 2008
– Comments (12)
Robert Reich has a post today where he basically says the heart of the issue of America taking on so much debt is declining wages in real terms.
I would suggest that that is just one part of the problem, and it is a huge problem. When a government artifically lowers rates you are also going to get harmful asset bubbles all over the place regardless of wages. When you fail to adequately regulate that which creates money, as in all these new financial instruments, you are going to have a problem. When you fail to adequately regulate insurable lending standards you are going to have a problem.
Yes wages have been declining, but asset prices did not because of idiotic and short term analysis of interest rates. In the short term and early in the artifically declining interest rates it was good for the economy, but you have to be a moron to not see that each new decline has declining "benefit" and is actually increasingly hurting an increasing demographic group.
Without interest rate manipulation asset prices ought to follow wages.
But, back onto the subject of declining wages, a major complaint of mine as I would suggest that here in BC wages have been declining for getting onto 30 years now. Reich says that a man in his 30s makes 12% less in real terms than in the 70s. Well, my father made $30-35k in the mid 70s and the 2 bedroom condo my mom bought was $32k. That condo now goes for about $400-500k. I would guess that wages in his occupation have doubled in "good" jobs but their are probably lots still working in the exact wage range as the 70s.
I would also suggest that other demographic groups have been harder hit by declining wages. Simple observation tells me that when there is a competition for a job males in that age range win the competition more often over other demographic groups.
Real wages have declined, but the dire problems from it have been quite hidden by loose monetary policy.
Something completely unrelated to the markets here, technology is killing me. I was thinking about all the things I used to easily be able to do and now I find highly challenged. For example, I used to be able to turn on the TV and watch a show. Now I can't figure out how to get past the menu system that come up so I get to watch a menu. I used to be able to work the remote. I used to be able to buzz someone in when answering the buzzer, now I have to run down and let them in cause I can't figure out how to let them in through the phone. I used to be able to watch a dvd, but that darn menu and remote... I used to be able to see who had called on my call display. I can't find the call display. I used to be able to listen to a message on the answering machine, clueless as to how this one works. Technology is leaving behind...
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