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Deflation of Wages

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July 09, 2008 – Comments (0)

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.

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