Monday, July 01, 2013

The Near-Invisible Economic News: Wages


If you think of the division of the economic gateau happening between labor and capital, the news we mostly get are whether the slices the capital gets are moist enough, have sufficient whipped cream and chocolate savings and so on.  We may be told something about the size of those slices but not much.

The slice labor gets is among those largely unreported things in mainstream news.  There are a few exceptions, such as this NYT story which shows how somebody may be legally paid less than the minimum wage, what with fees which are required to get hold of the wage package one has earned:

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.
For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.
But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.
These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators.

Another piece of economic news which hasn't got much coverage is this:  Wages Are Falling:

Breaking news alert! Wages fell at the fastest rate ever recorded during the first quarter of this year, the government’s Bureau of Labor Statistics reported.
Hourly wages fell 3.8 percent in the first quarter, the biggest drop since the BLS began tracking compensation in 1947. Productivity rose half a percentage point. The result was that what economists call “labor unit costs” fell 4.3 percent.
In plain English, that means paychecks overall shrank, but work output grew. If you are a business owner, that is news worthy of a toast with a bottle of the finest Cristal champagne, which at $595 is more than the $518 that a median-wage worker earns in a week.

Here's the truly troublesome thing about those numbers:  Productivity rose, which would make a sincere economist ask why wages didn't rise as well.  If worker productivity rose and wages fell, guess who it is who is making more than before?   The division of that economic cake is changing, again...