Wages Not Keeping Up With Inflation

The Bush administration's well-touted "recovery" appears to have hit another wall of economic reality. The Bureau of Labor Statistics reported late last week that hourly wages, after adjusting for inflation, fell 1.1 percent in June – the steepest decline in real hourly wages since 1991. At the same time, prices for everything from gas and electricity to health care and college tuition are on the rise.

• Prices continue to rise while wages remain stagnant. Despite large gains in productivity and corporate profits, wages for production workers – non-management employees, about 80 percent of workers – are failing to keep up with the increase in costs for most goods and services. As the Economic Policy Institute (EPI) reports, real hourly wages have declined for at least 5 of the last 6 months, even as the overall economy has grown.
• As a result, middle class families feel more squeezed than ever. With wages down and prices up, middle class families are taking on more and more debt to cover the costs of basic household needs and important long-term concerns like health care and education. Continuing the downward cycle, declining wages could in turn dampen the overall economic recovery and put even more pressure on the middle class.
• Massive tax cuts for the wealthy have failed to help millions of struggling Americans and left a legacy of debt our children will carry for years. More than $2 trillion in tax cuts – aimed almost exclusively at the top 2 percent of earners – have done little to help middle class families get by or get ahead and have produced staggering budget deficits now projected to top $5 trillion by the end of the decade.

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