The Rural Patriot

July 24, 2006

The U.S. Economy and You (Part 1)

Filed under: Unemployment,US Economy,Wages,working families — theruralpatriot @ 7:35 pm

The U.S. economy is strong!  The tax cuts are working and we must make them permanent!  The estate tax, (now known as the “death tax”), must be repealed!  We have to do this to keep our economy strong and growing! 

If you have any exposure to traditional media, there is no doubt that you have heard these phrases.  But, I ask, how’s your “personal economy” doing these days?  How did you like your last raise? (what??? You didn’t get a raise? )  But you received a tax cut, didn’t you? (you mean the one that we didn’t notice because the price of EVERYTHING has risen and the cut was barely noticeable?).   What’s that I hear about how your money just doesn’t seem to go as far as it used to go? 

I think it is time to take a look at some real numbers.  We can find  those numbers at our own government’s websites. 

Let’s start with wage growth.  According to the Bureau of Labor Statistics, the average hourly pay of non-supervisory workers was $14.70/hour in 2001.  In May 2006, it was $16.62/hour – an increase of 13.06%.  But you say, “That’s an increase, right?”.  Sure it is, if you don’t take into account the rate of inflation from 2001-2006.  From that time period, the measure went from 177.4 to 202.5.  That equates to an increase of 14.15%.  In reality, wages have decreased 1.09% over the past five years when you take inflation into account for this category of workers. 

Four year college graduates’ wages have also gone down.  And, the following figures do not  take into account the inflation measure:  In 2000, the average salary was $54,396; in 2004, it was $51,568.  This is a 5.2% decrease. 

Now, high school graduates’ salaries did rise.  Let’s look at the numbers.  In 2000, the average salary was $28,179; in 2004, it was $28,631.  That is an increase of $452, or 1.6%.  Wow!  That’s about an $90/year average increase – about $7.50/month!  And again, these figures do not take into account the inflation measure. 

We are told that with this country’s low unemployment rate, we are essentially considered to be at full employment.  Traditionally when that happens, wages rise and the job creation rate grows.  Again, as above, the wage rate did rise; however, when you take into account that pesky inflation rate, the wage rate actually dropped 1.25%.  (12/05 – wages $16.35/hr and inflation rate was 196.8; 5/06 – wages $16.62/hr and the inflation rate was 202.5.) 

Now, let’s look at job creation statistics.  For each of the periods of economic expansion since 1961, the compound rate of establishment job growth averaged between 2.01% (3/91-3/01) and 3.56% (3/75-1/80).  However, during this latest period of economic expansion, which started 11/01, the rate has grown only 0.71%.  The current administration holds the lowest rate of job creation during an economic expansion period in the past 40 years, and the tax cuts that were supposed to boost job creation has not worked as expected. 

Economic Expansion Job Growth Statistics (compounded)*  

2/61-12/69 ** 53,556,000/71,240,000 ** +17,684,000**+3.283% 

11/70-11/73 * 70,409,000/77,909,000 ** + 7,500,000 **  +3.43%

3/75-1/80   ** 76,649,000/90,800,000 ** +14,151,000 ** +3.56%

11/82-7/90 ** 88,770,000/109,773,000 * +21,003,000 **  +2.8%

3/91-3/01  **108,542,000/132,504,000 * +23,962,000 ** +2.01%

11/01-       **130,883,000/135,230,000 * + 4,347,000 ** +0.71%

(*Credit for the computation of this chart belongs to a friend of mine)

Our average wages are stagnant or in many cases, have declined.  Job creation rate is the lowest for an “economic expansion” period in the last 40+ years.  Our unemployment rate is reported as low; specifically, we are told we are at full employment.  However, the traditional trends for full employment, such as higher wages and job creation, are not apparent.  It does not look as though these large tax cuts for the wealthiest citizens in the U.S. are “trickling down” to the rest of us. 

Tomorrow, I will discuss aspects of U.S. personal debt statistics and other areas that affect the U.S. economy.

Advertisements

3 Comments »

  1. Yes, The economy is great for people who are in the top 5% of the income bracket and for oil, pharms, and insurance companies. They are making
    record profits at the expense of the rest of us. Our wages remain stagnant,
    while costs for essentials rise. The economy is worse for the lower class,
    the middle class, and even the upper middle class.

    * British Oil, which merged with Amoco, announced a 30% increase in profits today. (American oil companies are also making record profits). At $3.00 gallon that is not unexpected. It will be $4.00 a gallon by the end of the
    year.

    * Pharmeceuticals also posted larger than expected profits. According to the New York Times “Medicare Part D, which offers prescription coverage for people over 65, is fueling the profits, as drug makers benefit from new prescriptions
    and somewhat higher prices for medicines, Wall Street analysts say.
    Eventually, Part D could fuel a political reaction if prices
    continue to rise, but analysts expect the industry’s influence
    in Washington will delay any changes for years.”

    * Average cost of health insurance for a family of four is around $13,000 yearly.

    Representative Randy Kuhl’s website states baldfaced lies when it claims that
    medicare part D will save $1100 per person. The fact is, it cost more than before (many of the drugs were cover under medicaid at lower rates) and in many cases people will not be covered for the medications they need.

    The single payer method is the most cost-effective method and it would benefit
    the working class, middle class people, and small businesses. It would not benefit the pharms and insurance companies though.

    Representative Kuhl and the GOP always vote for big money. They voted to repeal the “death tax.” This means that now you can inherit up 5 million dollars without taxes. Previously you would have to pay taxes after 2 million. (Personally, I don’t know anyone who had a problem with the 2 million limit.) Kuhl and the GOP blocked the minimum wage vote It is only after realizing that his position is in danger that Kuhl reversed himself on the minimum wage.

    The average household income in Allegany and Cattaraugus counties is around
    $34,000. The top 5% is around $168,000 or more. So if your income is that high, it makes sense to vote for Randy and the GOP. They will look out for you.

    Comment by LeighAnneS — July 25, 2006 @ 5:23 pm | Reply

  2. Thanks, LeighAnneS, for your comment. You make many valid points. Not only are the pharmaceutical companies increasing their profits, many of the Medicare D participants are now hitting that “donut hole”. I have read reports where some participants are actually cutting their dosages in half or have gone without due to their not being able to afford the cost. I fear that there will be severe consequences for those who are in this situation. It should not have to be this way; not in our country.

    It seems that the oil companies are having record profits every quarter. Now, I’m not against businesses making healthy profits, but when you are raking in billions every quarter and then breaking the prior quarter’s profit margin by large percentages, something just doesn’t seem quite right. I’ve watched the oil execs try to explain this on different news shows, but I’m still not buying it.

    The residents of our counties need someone whom they can depend on to represent us and to take care of our interests. From what I have seen, Mr. Kuhl is sticking to this administration’s wishes and is casting the vast majority of his votes along administration lines. This is not the Republican party of old. This is an elephant that I don’t recognize.

    Comment by theruralpatriot — July 25, 2006 @ 7:16 pm | Reply

  3. Freedom is nothing else but a chance to be better, taste your freedom and be better.

    Comment by Gray — January 3, 2007 @ 9:08 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: