Deflation of Wages
I know that I have dealt with deflation of wages a few times in my life and that overall wages have not kept up to costs as all.
Mish has a very good post on this. In the bigger picture, this is part of the unwind of excessive cheap debt. The guy says he could pay $12, but will just offer $8 to put the difference to debt. Debt will force many business to cut wages to stay afloat.
I personally think a lot of business has been crippled for years in Vancouver because of lack of buying power. So if you look at business expenses the wage componet has declined as a percent of expenses. Many people lack the wages to stimulate the economy.
It is as bad a cycle as out of control credit card debt, it just gets worse every month.