Once a month or so, I put together a "Market Observation" for Financial Sense. Below is a snippet from today's column, "Not as Good as Some Believe":
(Source: http://econompicdata.blogspot.com/2009/11/who-needs-workers-anyhow.html.)
The Labor Department today reported that nonfarm productivity rose 9.5% in the third quarter, the fastest pace in six years. Boosted by lower than expected labor costs, the bigger-than-expected jump was widely hailed as positive by economists and stock traders.
Huh? In a debt-challenged, consumer-dependent economy like ours, where a growing number of Americans are struggling to get by, the fact that businesses continue to benefit from squeezing wages and cutting jobs would seem to be the recipe for social unrest and revolution, not a return to economic good fortune.
Click here to read the rest.
Plus sa change et plus s’est la meme chose.
Wages should form the price of goods,
yes, wages should be all
Then we who have to make the goods
should justly have them all—
But if the price be made of rent,
tithes ,taxes, profits, all–
then we who have to make the goods,
shall just have none at all.
( The poor man’s guardian 1851 )
Posted by: roger | November 05, 2009 at 11:18 PM
Michael, are you saying that "lower than expected labor costs" is a bad thing?
Americans earn too much and need a wage cut & higher productivity.
Businesses aren't "squeezing" their employess. Lower wages means more jobs.
This is a GOOD thing.
Posted by: Jack | November 05, 2009 at 11:31 PM
Not necessarily, jack !
Who else will hire ?
Posted by: guest | November 05, 2009 at 11:43 PM
If you add back the employer subsidy in providing medical insurance, real compensation may actually be going up, especially for older workers (60+). It now costs over $8,000 per year to provide medical insurance for an older single California worker working for a large employer. Most of this cost is borne by the employer. If a spouse is covered as well, the medical subsidy is even larger. Is it any wonder that employers are trying to hold the line on wages and salaries and are cutting their matching contributions to 401K plans?
Posted by: Rocky | November 06, 2009 at 10:46 AM
@ Roger: Sorry to be a language Nazi, but... Plus ça change, plus c'est la même chose.
@ Jack: Lower wages = more jobs? Uh, not always (remember: correlation does not equal causation). I am just hoping you forgot to place your tags in the code, though.
The jump in the U3 to 10.2% was not only a bigger jump than anticipated, but I fear it is the beginning of a long slide (first, the "not-as-good-as-anticipated" Gift...er, Holiday season, then HCR, then C&T....bad news ahead).
Posted by: rmac23 | November 06, 2009 at 10:55 AM
Wow...have to correct my own post...how embarrassing.
"I am just hoping you forgot to place your tags in the code, though." should be:
"I am just hoping you forgot to place your SARCASM tags in the code, though."
Posted by: rmac23 | November 06, 2009 at 10:57 AM
rmac23
Your absolutely right,I'm firing my stupid keyboard.
merci for the correction
Posted by: roger | November 06, 2009 at 11:30 AM
Lower wages means more jobs???
big biz already found then in China and India,
stupid consumers chop at big box discount ,thereby
exporting their own jobs; advice to business,if you
really want cheap labor,reinstate slavery'
The bottom line, is no labor force no profits,no rich class.
However before we get to that dismal state ,history tells us
we get a nice hot REVOLUTION>
Posted by: roger | November 06, 2009 at 01:18 PM