Thursday, June 17, 2010
Unemployment Claims And Wages
Only deflating consumer prices (-0.2% for May) is injecting enough into the economy to prevent that double dip, but consumer prices are going to start rising now.
And if wages and salaries don't rise, it's all up.
This is from the Monthly Treasury Statements, which can be found here:
May 2010You can compare that to the April progression in this post. The one-year YoY drop has declined, but the two-year YoY drop has increased marginally. The one-year comparison keeps getting easier and easier as we get further into the phase of declining incomes. As in April, we have to go back to 2007 to pretty much break even, and we only rack up an increase over 2006. Because I did not include 2006 figures for April, here they are:
HI Tax: 13,641
HI Tax: 13,946
Total: 14,224 (-2.2%)
HI Tax: 14,314
Total: 14,592 (-4.6%)
HI Tax: 13,708
Total: 13,968 (-0.04%)
HI Tax: 13,010
Total: 13,251 (+5.0%)
April 2006The bad news is that April's 2010/2006 change was a percentage point higher than May's. I think we are about to start seeing a better trend in wages and salaries. So far in June we have continued a YoY rise in WIET receipts.
HI Tax: 13,529
Total: 18,542 (+6.0%)
The implications are pretty profound, because these are nominal, aggregate figures. The population has increased since 2006, and when you account for the increase in the cost of services and items such as property taxes, total real aggregate wages and salaries have dropped since even 2006. Further, the higher-end incomes are the ones that have generally increased (there is no limit on HI tax), so the average wage earner is earning substantially less than four years ago on a real basis.
The fiscal position is not going to improve until we see wages and salaries rising again. One of the major issues are retirement benefits (SS, federal, state and local). As the wave of retirements increases, either salaries have to increase or average levels of taxation have to increase. There's no other way. The end result is going to be that we are going to have to boost taxation on retirement income, because there's no other way to balance the books.