Friday, October 01, 2010

Another Reason The General Public Is Unhappy -- No Raise in 40 Years

We have known for a long time that the happiness, satisfaction and contentment of the average employee in the United States has been on the decline for years. The question is why and the answers are numerous. One is basic economics -- the average Joe hasn't gotten a raise (on an inflation adjusted basis) in about 40 years . . .

This is excerpted from an article entitled, "Fragging Your Own Money" but Bill Bonner in today's Daily Reckoning. The link to the website to read the whole article is published at the end of this piece. Highly recommended . . .

"From the end of the Napoleonic wars until the beginning of World Wars of the 20th century, the world’s money system was backed by gold. You couldn’t “manage” it. You couldn’t devalue it. You couldn’t talk it up or talk it down. You couldn’t beggar thy neighbor by cheapening it or enrich him by making it more dear. It was what it was. The new experimental money system began in the Year of Richard Nixon, 1971. Thereafter, the supply of money could increase much faster than the supply of goods and services. US money supply (M2) rose 1,314% between 1970 and 2008, from $624 billion to $8.2 trillion. What did all this ersatz new money do? First it flattered…then it corrupted…and finally, it robbed.

"America’s working stiffs were the first to get whacked. Inflation made them feel like they were earning more; but they haven’t had a real, hourly raise since the system was put in place 4 decades ago. And now, America is struggling to make sure they get none in the future either. Lowering the dollar against the [Chinese] renminbi increases the cost of probably 90% of the goods in Wal-Mart and Costco – where the working classes shop.

"But this has been going on ever since the managers began taking liberties with the dollar. In the 1960s, the working man – 90% of the population – got 60% of the income gains of the period. By the end of the bubble years – 2001- 2007 – he got just 11%. This has resulted in a “record income gap,” says this week’s news. Half the nation’s income goes to the top 20% of the population, nearly twice as much, compared to the bottom 20%, as in 1967; it’s the biggest gap since they began keeping track."

The average worker probably can't cite these statistics, but they know the impact -- at a cellular level -- which may explain why work is despised by so many American employees (even as they smile for the boss and the cameras.) Given a chance to quit and not starve, most businesses in American couldn't field a punt return team. Not nice, but a fact nevertheless.

The article appears here:



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