Tuesday, December 13, 2005

macroblog: Are Workers Losing Ground?

I love the way the macroblog turned the whine about declining real average hourly earnings into"Praise George Bush!" Real compensation has risen faster during the Bush presidency than in prior administrations including those of Clinton and Carter.

The response from the lefties is easy to anticipate. They will say that the problem is that health care benefits are the cause. There is no doubt that Americans choose to pay more for health care than citizens of other nations. The lefties might conveniently leave out other factors such as increases in social security payments.

The whiners simply will not hear or will choose to disbelieve that Americans now have savings of 156% of consumer debt. No doubt there are savers and spenders in our society but consumer and business balance sheets are in the best shape in years.

Another important point is that we are just entering the expansion phase of the economic cycle, when wage increases will be the strongest. Even so, total compensation is already zooming. Over the next several years, employees will be delighted to receive higher than average wage increases.

My daughter is currently experiencing the good fortune of graduating college at just the right time. She has one job offer on the table and several more openings to consider.

Some church friends are debating the wisdom of buying a bigger house. They need the house but are concerned about their ability to pay. My counsel is that they should go for it. Their wages are going to rise while the mortgage payments will be fixed.

Because my wife and I borrowed the down payment and money for furnishings, our first house payment totaled about $600 for the first 5 years. The actual mortgage payment was $300.90. These numbers were huge because we moved out of an apartment that, including heat and water, cost $78 per month. My salary in 1977 was $9,500 per year. The total payments consumed 76% of may pay that year. By the time of the last payment, $300.90 for a house payment was a joke, one that we have enjoyed laughing about for years.

The beauty of America continues to be that it is a land of opportunity. Total average compensation is going up because Americans have the freedom to learn new skills, start new businesses and trade highly valued skills for services from others. God Bless America!