NewsMine — economy — united-states — 2005 — 2005-apr-july — Viewing Item

Real wages falling at fastest rate in 14 years { May 10 2005 } Original Source Link: (May no longer be active)    http://news.ft.com/cms/s/f269a8f4-c173-11d9-943f-00000e2511c8.html http://news.ft.com/cms/s/f269a8f4-c173-11d9-943f-00000e2511c8.html Real wages fall at fastest rate in 14 years By Christopher Swann in Washington Published: May 10 2005 17:59 | Last updated: May 10 2005 17:59 Real wages in the US are falling at their fastest rate in 14 years, according to data surveyed by the Financial Times by the Economic Policy Institute. Inflation rose 3.1 per cent in the year to March but salaries climbed just 2.4 per cent, according to the Employment Cost Index. In the final three months of 2004, real wages fell by 0.9 per cent. The last time salaries fell this steeply was at the start of 1991, when real wages declined by 1.1 per cent. Stingy pay rises mean many Americans will have to work longer hours to keep up with the cost of living, and they could ultimately undermine consumer spending and economic growth. Many economists believe that in spite of the unexpectedly large rise in job creation of 274,000 in April, the uneven revival in the labour market since the 2001 recession has made it hard for workers to negotiate real improvements in living standards. Even after last month's bumper gain in employment, there are 22,000 fewer private sector jobs than when the recession began in March 2001, a 0.02 per cent fall. At the same point in the recovery from the recession of the early 1990s, private sector employment was up 4.7 per cent. “There is still little evidence that workers are gaining much traction in their negotiations,” said Paul Ashworth, US analyst at Capital Economics, the consultancy. “If this does not pick up, it raises the prospect of a sharper slowdown in consumer spending than we have been expecting.” Economists are divided over the best source for measuring pay increases in the US, since the government releases three main measures. A gauge of average hourly earnings is released with the employment report. This rose by 0.3 per cent in both March and April and 0.1 per cent in February. Even with a slight rise in the hours employees are working, from 33.7 to 33.9, this suggests wages are struggling to keep pace with inflation. The gauge covers non-supervisory workers, about 80 per cent of the workforce. The Bureau of Economic Analysis figures for personal income showed wages rising at close to 6 per cent in 2004 but slowing down since. This measure also showed wages rising by just 0.3 per cent in each of the past 2 months. This is a broader gauge and includes small businesses and professional partnerships, but it measures total corporate wage bill rather than wages per person. The Employment Cost Index, seen by some as the most reliable measure, excludes overtime and professional partnerships.

120 thousand united airline employees lose pensions { May 11 2005 } American obesity sending health costs soaring Consumer prices rise greater than expected Dow has biggest 2 day drop in two years Durable goods orders fall by most in 2 years Economy drags heels and inflations fears rise { April 29 2005 } Fed raises key rate on inflation fears { May 3 2005 } Fed raises rates to 3 and half as measured plan Fed says inflation pressures could be intesnifying { April 12 2005 } General motors shifts engineer positions to brazil { June 29 2005 } General motors to cut 25 thousand jobs { June 8 2005 } Greenspan says fed will keep raising rates Greenspan will keep raising rates he says Housing prices loom as concern { July 20 2005 } Huggies cuts six thousand jobs Industry squeezed by soaring energy prices { June 26 2005 } Kodak lays off 10 thousand workers { July 20 2005 } London blasts help dollar and stock gains Manufacturing slow down boosted stocks they say Manufacturing weakest since 2003 { June 1 2005 } Massachusetts homes sales plunge 11 percent { June 24 2005 } Real wages falling at fastest rate in 14 years { May 10 2005 } Sales of homes hit record as prices soar { May 24 2005 } Snow says oil prices hurting economy { June 28 2005 } States costs soar under drivers license law Stocks continue april decline hitting 2005 lows Stocks fall amid oil price worries { June 21 2005 } Stocks head lower on surging oil Stocks rise on jump in oil prices { June 17 2005 } Student loan interest will double Trade deficit unexpectedly shrank to 55b Trade gap widens more than expected US stocks fall as IBM earnings drag tech shares down US tourism losing billions because of image { May 8 2005 } Wages lagging behind inflation { April 11 2005 } Weak consumer spending damps speculation of quickening inflation Files Listed: 36

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