Why American Workers are Unlikely to obtain a Raise in 2015
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Although the end of 2014 was brimming with some positive articles about the improving state of the United States economy despite Obamacare, the Dept. of the Interior, and the EPA holding back millions of Americans from improving their lives, some experts remain skeptical about whether America has overcome all of its financial problems.
Although the end of 2014 was brimming with some positive articles about the improving state of the United States economy despite Obamacare, the Dept. of the Interior, and the EPA holding back millions of Americans from improving their lives, some experts remain skeptical about whether America has overcome all of its financial problems.
The final quarter of 2014 came with a 5% annual growth in US GDP, as well as an overall but controversial and distrusted unemployment rate that fell below 6%. This led some people to suggest that the US economy had finally completed its recovery, but there are many others who believe America has not even came close to recovering yet for myriad reasons. Though the country may be taking steps away from the financial crisis, there is still one major issue in play: wage stagnation amongst workers.
Table of Contents
Not Enough Money!
It seems that the average wage in the US has remained unchanged for the last eight years and, inflation-adjusted, is less than American workers earned during the nineteen seventies. Terrible wages can result from a number of causes. Regardless of the cause, the result remains the same. Americans remain vastly underpaid, and it seems as though that is not going to change. Thirty-hour work weeks imposed by the Affordable Care Act (ACA) certainly does not help.
Slowdown in Growth
One suggested reason for the poor wages in the US is the recent growth and productivity slowdown, referred by some as the “great stagnation.” However, if you are under the impression that workers’ wages should rise alongside productivity, such a thing has not happened in the United States since the seventies. In fact, the country is suffering from greater income inequality and significantly slow growth when it comes to the living standards of low- and moderate-income individuals.
Another common excuse for stagnation is that overall compensation is a result of increased spending on healthcare and benefits. This is mainly pertaining to the ACA as well.
The favored reason for the economic worries in America, given by economist Barry Bosworth, is that the changing state of the global economy, combined with its significant pool of labor, increased focus on intellectual property, and permissive rules regarding capital sloshing in the world, has resulted in a lower share of income.
The Future of Wages for the US
The trends that exist regarding hourly wage growth have a serious impact on the living standards of Americans. The vast majority of people in the US rely on their regular paychecks as a way of simply making ends meet.
If wage-growth sceptics like Barry Bosworth are right, the chances are that no matter how robust the US economy appears to be getting (appears is the notable word here), hardworking individuals are not going to receive the rewards of harder work. This is certainly the case in cities such as New York, Chicago, and LA, where anti-business policies are the norm. Those with a poor income in 2015 will get no reward for their patience because high health care costs, anti-business regulations, and so on.
