Household Despair

I did not intend to again write on the state of real Wages after my last Posting; but flairs in the Internet world suggest that I must. Greg Mankiw appears to be the most Instructive, Tim Worstall poses a viable question left unanswered, and a list of Others (Roberts, Altig, etc.) claim the inciting NYTimes article (find in Mankiw's Post) wrong in ignoring the scope of Labor Benefits in a study of total Compensation of Labor.

I suggest the NYTimes article was not in pursuit of Total Compensation of Labor. Let Us review a few facts about Households and Wages. Households' Consumption makes up about Two-Thirds of the Economy. Consumer Prices have risen over 4% year over year, and is expected to continue at this or worse rates unless something is done. The Question here is what? The Fed interbank rate is now over 5% (notice I do not utilize such pesky things as hard numbers) as marginal rates are immaterial in this Discussion; higher Fed rates would only further damage Household control of Expenses during a Slowdown, without any appreciable curtailment of Inflation. Tim, the Mankiw argument holds very shakey sway, but Labor Hires are inhibited because of those generous Benefits which Business continues to attempt Payout denial; filling your Argument with a hefty relevance. Household Take-Home Pay continues to fail in the face of real Consumer Price Inflation.

A pursual of the Concept of Benefits might be appropriate at this time. Benefits are structured Promises which Business gives to Employees in lieu of actual Cash Wages. The Thought behind Benefits from the Business viewpoint remains: We can promise now, and pay later; perhaps, We can even deny Payment later, after We have gained a sublevel Wage production. Business can underfund their Health and Pension Funds, and use these funds for their own Investment desires, until Employees, Health needs, or the passage of Time makes a rude demand for such Payments. The central core element here being that the funding does not actually have to be secured, and Business even gets a Tax reduction for the promises. By the way, this also has a heavy impact on Mankiw's generalized marginal productivity argument. There is the final element accuring to Business health stands as Republican Courts and Administrations which allows for easy Business default on such Fund underwriting, though We achieve strict Bankruptcy law to forestall Households from alleging that they cannot pay. Still, Households seem untouched by the wonderous Wand of Benefits; they always destined for other Business organizations, unless of course, Pension awards are actually paid years down the Road. lgl