Is the Whitehouse pursuing a policy of wage deflation?

[seasat]

I started wondering, based on their policies, if the Whitehouse is pursuing a policy of wage deflation for middle to low income workers. This latest story got me thinking about it.

Link to Story

WASHINGTON - The White House on Tuesday threatened to veto a massive House highway spending bill, rejecting efforts by House GOP leaders to find common ground between the administration's demand for fiscal discipline and lawmaker pleas for more road-building money.

The White House statement came on the eve of House debate on a six-year $275 billion highway and transit bill that House Speaker Dennis Hastert, R-Ill., played a major role in crafting and which many Republicans, as well as Democrats, see as a major job creator.

They don't have a problem with huge pork laden bills but take a stand on a bill that will create direct jobs for the lower wage working class along with improving our highway system. Now, if you reexamine their past policies, refusing extensions on unemployment, promoting easy credit, H1B visas, amnesty program for illegal immigrants, promoting outsourcing, and huge tax cuts for the wealthy, it appears the Shrubbites have a policy of low wage growth with high debt loads for the middle and lower working class.

This EPI analysis shows that wage growth for most of those below the 75th percentile has been stagnant through the Shrub economy. I used to think it was the ineptitude of their economic plan but now I'm starting to wonder if wage deflation is part of the plan. What do y'all think?

[Warpy]

1. yes, they are,

...and have been for at least the last 30 years. The tax code is skewed against workers. Doubling FICA (which is matched by employers) is one of the things that has increased the offshoring of first manufacturing and now office jobs. Yet, these fools continue to use the US as their primary market for goods and services, and continue rake off all the savings to fatten top management and shareholders, charging US consumers prices that reflect having kept the jobs in the US. They are not about to lower prices, and more people will be thrown out of work in the McJobs that are here as the remaining consumer market dries up.

To say that this policy won't last is to state the obvious. However, the transition, as more and more families lose everything they have worked for and end up with nothing, will be horrible. Expect record foreclosures for the next few years. Expect record personal bankruptcies. Expect huge increases in the number of homeless families. In other words, expect another Depression.

[kalian]

2. Its quite possible....

and at the same time it would "fit" with "globalisation". Cheaper
salaries are the only thing that would stem the outsourcing tide, per
corporate dogma. American workers are "too expensive" to maintain
on the payrolls and thus the labor supply "chases" the cheaper
salary demands.

The question is: how far down can American adjust in order to keep
on going. With the outrageous levels of debt, one has to wonder
what the long-term implications will be.

[Warpy]

4. Unemployment rises first

....long before prices start to fall. We're seeing just the beginning of that particular cycle. The remaining jobs are renegotiated with workers to drive wages still lower. Workers who protest they can't live on less than subsistence are replaced with more desperate workers who are willing to try (e.g. Shrub's Mexican "guest workers," who are even now being recruited). Prices remain high. Only when unemployment rises enough to totally dry up the consumer market do prices start to fall, and then not nearly as fast or as far as wages do.

What we're seeing now is the final stage of the fat cat feeding frenzy before the collapse. If Shrub & Co get another term, we WILL see a Depression.

[loftycity]

3. Hate to say it "Debtors Prison" Prison labor -cheaper than off-

shoring.

[rhino47]

5. Sure they want lower wages.WH is full of cheap labor conservatives.

http://www.conceptualguerilla.com/beattherightinthree.htm

Basic concept is keep people divided and at each others throats
to get the most work out of them for the least amount of pay.
Just as disgusting as the starve the beast supply siders.All the same group.
They have any social spending.This defeats their purpose.Give people a safety net and you lose the whip over their heads.

[loftycity]

8. Thanks for the link to the Cheap Labor conservatives really good.

[TheFarseer]

6. I thought we were all taking that for granted

I think it's pretty obvious they want to turn this into Mexico North at least economically and wage structurally.

[54anickel]

7. "I owe my soul to the company store". That's the tune that runs thru

my head when I think about stuff like this. Corps and their lobbyists have taken over the gov't. Employees are just another commodity, labor another raw material. Most of us will end up working for a Walmart type of company and our pay will be vouchers to be used there.
Isn't the future looking bright.

[stevebreeze]

9. well you just can't find good domestic servants these days!

how else you gonna keep up your McMansions?

[ramapo]

10. Lower wages equals higher profits

Higher profits equal higher stock price.

At some point lower wages equal decreased buying power which has a negative impact on the economy but let's not think too far ahead.

[rapier]

11. notes

The entire financial world including the Fed is playing the wage deflation game. This has been going on for years and years folks. Wages have been stagnent for the lowest 7 deciles since 1973, 30 frikken years!!! It was codified under Rubin and Clinton.

Globalization is wage arbitrage, period. Or rather freeing capital movements in order to seek lower wages. Seeking lower wages being the definition of wage arbitrage.

While we can argue that wages are too low in China, it is hard to argue that hundreds of millions of Chineese are not better off now because of those jobs and the partial destruction of communist economy.

If you listen to Greenspan his endless blabbering about the lack of inflation is centered upon wage inflation. He KNOWS wages will not rise and can't rise so this is his ace in the hole. All other inflation can be hidden with statistical tricks, but wages can't be.

The miracle has been, since Clinton's day, how Americans can be sold on policies to lower their pay. Now one can argue the ideology and theology of 'free markets' and the benefits of globalization etc. etc. till your blue in the face but the simple fact is that nobody in their right mind would vote for this if they are a wage slave. Ideology is all well and good for the now significant 'conservative' plurality of voters but when it comes to the pocketbook ideology fades into obscurity.

The trick has been to replace income from wages with the inflation of financial assets and home prices. This has allowed the solidly middle class to feel wealthy despite stagnant wages. Asset inflation is the absolute necessity to maintain political control in America. If and or when the world of finance cracks the world as we know it, politically and cultrually will be swept away, and with it our lifestyle. (God, I hate that word)

Income from work, wages in other words, are doomed to fall in relation to general prices for a long long time. Perhaps forever. The post war period of rising income broadly distributed here in the US was an anomaly.

Most here are appalled to some degree by the mindless consumption that defines American culture. Consumption from which springs, to name an example, environmental disaster. Yet we are reluctant admit that it is high wages, at least higher than several billion other humans can ever dream of achieving which is the cause of that consumption. Cry falling wages if you must to gain political points but know in your heart that Americas tiny percentage of global population using 25% of world energy is a tell that something is way out of wack. Our wages can't rise in relation to the other 5 billion on earth. I'm not saying economics is a zero sum game mind you. I'm just saying that one way or another we are too rich, or perhaps I should say, too wastefull.