A Brisk Rise in American Wages
By Mark Trumbull | Staff writer of The Christian Science Monitor
Pay rose faster than the cost of living for the first time in years.
American paychecks are rising again at a pace not seen since the 1990s.
The pay increase amounts to 4 percent on average over the past 12 months, and it comes at a very helpful time for millions of households.
For three years, pay increases haven’t kept pace with the rising cost of living. Then came this year’s housing slowdown, which has further squeezed family finances.
Those setbacks, however, are now being offset by rising income. Four percent may not sound like much, but you have to look back to 1997 to find a calendar year with a gain that big.
Equally significant, tamer energy prices mean that the “real” wage gains, after inflation, are above 3 percent for the past 12 months. That, too, hasn’t happened since the 1990s, even though the economy has been expanding over the past five years.
“The striking feature of this expansion has been that ... real wages for the typical worker haven’t risen that much,” says Richard Berner, US economist at the investment bank Morgan Stanley in New York. But with real incomes rising, he says, “you get a picture of an economy that can weather this housing storm.”
The risk of recession hasn’t disappeared, he and other economists say. But with a fairly tight job market and low unemployment, many expect that paychecks will keep rising solidly in 2007.
Sandy Nelson has seen the strength of rising incomes first hand this year.
She runs Mulberry Road, a children’s store near Boston’s trendy Newbury Street, and says traffic has been increasing.
More customers means more income for her - and more money to keep investing in her young business.
“I have more of what people are looking for,” she says, pointing to racks of colorful clothing for toddlers.
In other words, Ms. Nelson is ready for the vital holiday season.
“I’m just hopeful that it will be as good as what they’re saying,” she says, citing retail forecasts that New Englanders will spend more than $700 on gifts this season, on average.
The average private-sector paycheck is now $573 per week, according to Labor Department figures that cover about 8 in 10 workers - those in production or nonsupervisory jobs.
(Graphic) SOURCE: LABOR DEPARTMENT (2006 DATA ARE FOR 12 MONTHS ENDING IN OCTOBER)/RICH CLABAUGH - STAFFAs recently as this past October, weekly pay adjusted for inflation was below where it was when President Bush took office in 2001. In effect, rising prices for things like healthcare, college tuition, and especially for energy ate up all the wage gains of an expanding economy, and then some.
The spike in energy costs was extreme, but the pattern was a common one. Wages generally rise fastest when the economy is strong and inflation is low.
That’s why this moderation in fuel prices is so important.
[...]
Another positive sign: Companies are laying off fewer people this year, says John Challenger, who heads the outplacement firm Challenger, Gray & Christmas in Chicago.
Read the whole thing.
They choose to tell us this news after the election. Wonder why?
Maybe they think we will all believe this is due to the Dems taking Congress, even though they haven’t done anything yet.(except to threaten the oil companies)
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