US employment continues to grow while unemployment continues to shrink, but wages have been stagnant for more than a decade. What’s the reason, and is there a solution to the middle-classes declining standard of living?

Sheffield. Jamaica Correspondent-That question has lingered on my mind for years. Sadly, that condition doesn’t only exist in America, but is a global crisis.

Regardless of how the employment figure looks – whether it increases or decreases – wages will remain the same. It all boils down to one word – greed.

Corporations and big businesses are so driven and filled with greed, that they are willing to keep wages stagnant irrespective of how affluent and profitable their business becomes.

The less these businesses have to pay out in wages, the more they have to pocket and feed into their bank accounts.

Why would these businesses pay their employees more when they can pay a bagatelle without being held accountable by the government?

To resolve the declining standard of living, especially among the middle-class, economists have tried correcting and implementing several factors. They’ve seemingly raised taxation for the rich to create an equalizing and allow those in the middle-class to take home more but to no avail.

They’ve also considered building more houses since middle-class residents are spending excessively on homes. This was to guarantee that those within the middle-class could build affordable homes in thriving cities and benefit from the wealth in those areas.

All those and more have been implemented but a solution remains elusive. It’s simple, the stagnant salary issue and declining standard of living for the middle-class is above mankind. We need divine intervention.

Gastonia, NC Correspondent-For decades, businesses have been lauded for increasing their workforces. Every time a politician wants to give tax breaks or some other sop to big business, he points to the number of jobs that have been created even in the face of increasing automation and efficiency. Back in the early part of the 20th century, it was the same. The Triangle Shirtwaist Company employed hundreds as part of a thriving business…until the factory caught fire and the modern era of worker safety was rung in on the burned backs of nearly 150 employees, many of them women and children.

While today’s workers are safer, they are no more rewarded than those women kept locked to their machines while the factory burned around them. Cubicle farms are occupied by thousands of barely-paid drones who hate their jobs and are paid just enough to keep them from quitting or going into open revolt.

One solution to this is to tie benefits given to businesses to wage growth, not just increases in employment. If the carrot dangling at the end of the stick changes, then the corporate mule chasing it will have to change, as well.

However, I don’t see this happening, and I’m pinning my hopes on another possible solution. Small businesses which pay their employees fair wages are proliferating, largely thanks to the internet’s ability to put them and their products and services in touch with a greater customer base. Eventually, they will pull the best and brightest from the megacorporations, and the big boys’ production and product quality will suffer. When their bottom lines are affected, they’ll either see the error of their ways and loosen the purse strings or they’ll end up in the economic tar pit of their predecessors.

Myrtle Beach, SC Correspondent-First off…unemployment is NOT shrinking. The number of people collecting unemployment is shrinking, but not because they have found jobs. The number is getting smaller because they have exhausted benefits or gone on disability, Social Security etc. But it’s a false narrative that unemployment is shrinking.

To the question at hand: The solution is simple. Employers need to pay a decent wage! I’m not suggesting a higher minimum wage. What I’m suggesting is that big employers pay their employees a “better” wage, and offer benefits packages. It’s the sad truth that employers are all about the bottom line though. They have increased profits every year but don’t give back to the employees who work for them (and most of the time give to their profits by purchasing their goods). How do we fix this? You wouldn’t think we would need to have this conversation. It’s the right thing to do as a business. You take care of your people. Unfortunately, the only thing we can do is place some sort of “regulations” or “rules” on businesses. Maybe something along the lines of a profit margin percentage? If your margin is a certain amount you are required to give your employees a raise? I don’t know how that would work. But, really, just be a good business owner and pay your employees a decent living wage. It’s the right thing to do.

Owatonna, MN Correspondent-Politicians love to blame one group or country or mega-corporation for wage stagnation. But blaming one group or another misses the real reason wages have stagnated since the 1970s, but most noticeably in the past 10-15 years. The root cause of wage stagnation is the combination of three fundamental economic laws: supply and demand, the efficient allocation of resources, and the requirement of profitability for a business to be successful.

Supply and demand mean prices for goods and services will rise and fall depending on the scarcity of an item combined with the demand for that item. Automation, just-in-time inventory management, and computerized sales tracking assure us that prices on many goods will remain stable because demand and supply can be balanced quickly and won’t fluctuate wildly for very long. If prices don’t rise much, businesses can’t increase wages proportionately.

Efficient allocation of resources means fiscal and human capital will flow to wherever a business owner can get the most bang for her buck. If labor can be purchased more cheaply in one area vs. another area, the business will hire the cheaper labor force. This means high-labor-cost markets such as the U.S. must now compete with a worldwide workforce for many jobs. This puts downward pressure on all wages until the lowest-wage workers begin to insist on higher wages due to their higher productivity.

Profitability means a business must produce its product for less than the price for which it sells that product. If this doesn’t happen, the company will eventually go bankrupt, and its employees will lose their jobs. If competition forces that company to cut the price of its product, then wages, along with other production costs, are likely to stay the same or decrease.

All these factors create downward pressure on cost and price for most goods and services. After World War II, the U.S. was the only viable economy left standing on the world stage. Our businesses only had competition among themselves, and wages could be generous and support a middle-class lifestyle. Today, the U.S. has lost its competitive pricing advantage now that the rest of the world has begun to take its share of the economic pie.

There does not seem to be a solution to stagnating wages in the U.S. The last half of the 20th Century was a positive economic blip for the U.S., which allowed us to accustom ourselves to an unrealistic lifestyle. The challenge will be for Americans to downsize and prioritize their spending so the wages they do earn will be spent on what matters most. As Charles Dickens famously wrote in his novel David Copperfield: “Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

Cartwright-Let’s consider two factors: supply and demand for labor and the impact on wages and the perceived standard of living. Since the financial crisis, we’ve had an abundant supply of workers of all skill levels. The economy lost hundreds of thousands of jobs and all of those workers were competing for a small number of jobs. It was an employers market. Employers could offer low wages and still attract qualified workers. The supply of workers exceeded demand and as a result the cost of labor, wages paid, remained low. I personally know many highly educated workers who couldn’t find good jobs after the financial crisis and had to settle for wages that weren’t much above minimum wage. These are people with law degrees from Georgetown and master’s degrees from good schools. Wages aren’t going to rise as long as there is a pool of workers who are willing to work for low wages.

There are plenty of young people, some educated and some not, who are willing to work for low wages in the food service industry, other service businesses, etc. There are plenty of foreign workers, both legal and illegal, who are also willing to work for low wages. As long as employers have an adequate supply of workers from which to draw, wages for low skilled jobs will remain low. The pool for low skilled labor is much larger than the pool of workers for skilled trades jobs, for example. Plenty of young kids can work at McDonald’s but these same kids can’t work as mechanics or plumbers or electricians. The pool of mechanics and other tradesmen is much smaller. That’s why tradesmen generally make more than someone flipping burgers. This is just the fact. If suddenly there was a scarcity of unskilled laborers, whether they are US citizens or foreigners (legal or illegal), you would likely see wages rise for the low skilled jobs. If there’s a smaller supply of labor but the demand is constant or increasing, the cost of that labor is going to have to rise at some point. Basic economics here.

As the economy grows and labor markets tighten up, I think we will see some type of rise in wages in time. Remember, we have a lot of people sitting on the sidelines. These are people who lost their jobs in the recession and left the workforce. If they start returning to the workforce, the supply of labor is going to remain favorable which will be sufficient to satisfy demand and keep wages in check. Once these people are employed again, the labor pool gets a bit smaller and tighter. That’s when you see some upward pressure on wages. I’d also make note that changes to immigration policies could result in less availability of workers for low paying jobs which could put upward pressure on wages.

With regards to the standard of living, let’s keep a couple of things in mind. I don’t think that flipping burgers is supposed to be a career, but if that is your life career, your earning potential is limited and that’s going to define your lifestyle. To think that kids working at McDonald’s should be making enough to have their own apartment, their own car, the newest cell phones, take vacations, eat out, and live the high life is a flawed line of thinking. You work these jobs when you have. Hopefully, you’re working on your education to lift you up and out of this job to something that can provide a better life for you. The rewards of a better life should be the incentive, right? Go to school, get your free K-12 education, and then decide if you need a college education or some type of vocational education or training. And let’s keep in mind that anyone that applies themselves and works hard is well positioned to get assistance with higher education.

The other part of the standard of living debate is the unrealistic set of expectations that some people have. People, particularly the millennials, have a set of expectations that they should be able to have their own place, their own car, the latest technology, and everything else they want. Perhaps it’s high time to assess the definition of a good standard of living. Not everything can be handed to you on a silver platter and you’re not entitled to the newest iPhone. Maybe you have to have roommates and carpool or use public transport. Maybe you don’t get that new smartphone or video game. Maybe you need to learn to live within your means. You have to make sacrifices and do without sometimes. You have to assess what you need versus what you want. Basically, you need shelter and food. Live with roommates and feed yourself. There are plenty of low cost food options that will keep you from starving. Beyond that, transportation may be a necessity but that necessity may not include your own car.

And learn to make good decisions and think things through. If you’re a low skilled and low paid worker, don’t get pregnant or don’t get a girl pregnant. That’s the last thing you need if you’re trying to obtain a higher standard of living. Children are very expensive, and if you don’t have the money to take care of yourself, how are you going to take care of a child? If you’re a married couple living from paycheck to paycheck, you may want to think twice about starting a family. I know this sounds harsh, but people need to think this stuff through.

In short, wages rise when you have tight labor markets which can result from a growing economy and changes to immigration policies. The standard of living needs to be reassessed in terms of what people need rather than what they want. Learn to live within your means.

Leave a Reply

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

You are commenting using your 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 )

Connecting to %s