Static wages
Inflation taking too big a bite out of paychecks.
The Great Recession did a number on many Americans. Apparently, we’re so thankful just to have jobs that some of us didn’t blink an eye when President Trump tweeted that “this is the greatest economy in the HISTORY of America.”
Another boast that doesn’t hold water.
It’s great news that the nation has reached “full employment” — a jobless rate under 4 percent. In theory, the higher demand for workers should be pushing raises up, but that’s not happening.
Labor Department statistics show that while the average hourly wage rose about 2.7 percent over the past year, that modest increase in takehome pay was more than offset by a corresponding inflation rate of 2.9 percent.
More Americans may be working (about 155 million compared with 138 million in 2009), but their paychecks aren’t buying as much because of higher prices. Inflation was under 1 percent in 2014 and 2015, then rose to 2.1 percent the year Trump was elected.
Trump’s trade wars will further reduce the buying power of American consumers. More than 1,300 products made in China have been targeted by Trump, including flatscreen TVs, air-conditioner compressors, X-rays and pacemakers.
Consumers can also expect the Federal Reserve to hit them with a third interest rate hike later this year. Trump criticized the Fed for low interest rates during the Obama administration, but he covets low rates now to help show his policies have boosted the economy. Stagnant wages say he hasn’t.
Some employers argue they are paying more for employee benefits such as health insurance. That may be true, but premiums and co-pays are taking a bigger bite out of employee paychecks too. A Kaiser Family Foundation study shows the average worker now pays about $5,714 a year for a family health insurance plan, compared with $4,316 five years ago.
It’s hard to excuse companies that pay workers low wages while their CEOs receive lavish salaries. A survey of major companies in Houston showed their chief executives on average were being paid up to 935 times more than the median employee salary. Yes, you read that correctly. Halliburton CEO Jeff Miller, was paid $23 million last year. Median pay? About $79,000.
We applaud AT&T, Comcast and Home Depot for using Trump’s tax cuts to give their employees one-time bonuses of about $1,000. We commend McDonald’s, Starbucks, Walmart, and Aetna for raising employees’ minimum pay.
The more people have in their pockets, the more they will consume. That creates more jobs and opportunity. Stimulating the economy isn’t just the government’s job. Every company should play a role.