Maybe if you boned up on your Reaganomics you'd understand.

It's all part of the meme that Americans spend more than they earn. If that's true, then a rise in prices hurts more than an equal decline in wages.

Uhh, some prices went up, and some went down. Further more, we don't all spend equally.

Can't believe I had to point that out.

It sounds a bit redundant to me. inflation went up .8% wages were stagnant.

The sorta good news is it was mostly energy prices, which are now in a temporary retreat. I wouldn't be surprised if July->August shows negative inflation.

The reality is that the response to a step function increase in (imported) energy prices, is that on average we are all poorer than before. This can be made up by a combination of inflation and/or lower wages. The other nasty reality, is we were temporarily made richer by running a large current account deficit of >5% of GDP. If we stop (or slowdown) foreign borrowing we will see a big hit from this source as well. The country has been living well beyond its means, and the adjustment won't be pretty.

Wages are only declining for those poor schmucks who make up the bottom four quintiles of earners. Once you get up into the top quintile, the top 20% of earners, wages aren't really going down that much, and for the top 10% they are going up.

We all know that it is the top wage earners who, and only the top, that matter. They are the ones who vote and, in many other ways, elect our government. The bottom 80% don't matter. They'll take what we give them.

So when is this going to happen?

http://www.usatoday.com/money/companies/management/2002-09-23-ayn-rand_x.htm

That big sucking sound you hear is all the money being sent to Saudi Arabia, China and the rest of the world waxing fat selling us trinkets. America will remain in decline as long as we are bleeding wealth.

Watching the Olympics the other night I was struck with the fact that Chinese are building new innovative infrastructure from high speed trains, to major dams and on to really cool buildings. We might complain that they are wasting their money or trashing the environment, but the fact is they are doing lots and lots of big projects. Think of all those people working on those big projects. Think of the wealth they are creating.

When was the last time America took on a big project?

In a newsroom with some connection to the normal world

Yeah, like we're going to see one of those anytime soon.

When was the last time America took on a big project?

Bringing democracy to Iraq?

Infllaton impacts bondholders like George W. Bush. Unemployment only impacts little people.

Wages are for chumps

The decline of wages will not motivate the lower classes to work harder, working harder for less is not the American Way, but will motivate them to utilize the black markets to make up the difference between the low wages for their hard work and rising costs of essentials like food and energy.

"When was the last time America took on a big project? "

El right wing is in control and right wing thinking is that having a government that does nothing is best.

Well... better modify that a bit.

Do nothing except for diverting taxes to your cronies and wiretapping, invading and bombing the wogs and kicking down doors and restricting birth control and putting religion in the schools and...

Looks like "dribble down economics" isn't working. Get Phil Gramm on the horn -- STAT!

It's really sad that the media has failed to tie these two statistics together. Taken at face value, these stats show that the current inflation is NOT due to rising wages; raising interest rates is not a proper remedy at this time. If weekly earnings were down due to fewer hours worked each week, this may not be the case; while I've seen figures showing that indeed hours per week are down, to my knowledge hourly wages are not up.

Infllaton impacts bondholders like George W. Bush. Unemployment only impacts little people.

Kevin is one the few commentators to bring this point up.

There is such a prejudice in our society against distributing economic gains to labor instead of having the bulk of it going to the holders of capital that even mainstream Dems are afraid to challenge this. No wonder working and middle-class people are falling so far behind.

Labor income is probably now taxed at a higher rate than returns on investment. Any increase in wages is now seen as inflationary and is cited as a cause of worry. Consequently, government policy is now actively engaged in keeping the incomes of ordinary people down, even by people with good intentions.

How much do staff reporters and editors make at the big print media? I find it hard to believe they're making soooo much both elements (inflation/wages) would affect their world.

no one has said the current round of inflation has anything to do with wages but rather everything to do with rising energy and commodity prices, and the effect they have on everything else.

and yeah, it makes sense to lede with the inflation numbers since by definition it cuts everyone's wages. unless of course you're one of the few who consumes neither energy nor food.

Well, no matter what, the money seems to go less far than it used to.

As a kid, when you hear people talk about what things used to cost, it sounds kind of weird. But then you experience inflation yourself. And you don't get the full experience, of course, unless earnings don't keep pace with inflation.

Remember when an individual can of soda from a vending machine or a lunch-counter was $0.50? I remember when I thought $0.75 for that was highway robbery. Now you'll find people who will charge you $1.25 (or even more at events). Remember when a postage stamp was $0.25?

When I was a kid, I used to buy comic books for $0.75 each. I could go to a comic book store with a few bucks, and come home with a bunch of comics I could read all month.

When my mom was a kid, she used to get sent to buy her dad packs of Camel cigaretts for something like $0.20 or $0.05 a pack.

Are wage drops adjusted for unemployment gains? If not, then maybe they're ignored because they are only a function of many people becing shifted involuntarily to part-time or moving to underemployment from unemployment

I agree with Mudwall's point that commodity-driven inflation should be the lede, that's the big story right now. But shouldn't other newspaper besides the LA Times at least mention falling real wages? That's the real consequence of inflation.

On the other hand, I think there are many consumer products-- specifically home furnishings-- that are a little more available and tend to be higher quality at a lower cost than when I was a kid. This is just the way it seems to me.

And we're also better off in that we have cell-phones and the Internet, which we didn't have 30 years ago, at low prices.

But for many consumer products, including most food products, I think we are in effect getting noticeably harder than when I was a kid growing up in the '80s.

But for many consumer products, including most food products, I think we are in effect getting noticeably harder than

Sorry, meant to say "getting hit noticeably harder."

I would like to echo Swan's lament on comic book prices. Comic books are priced out of what should be kid prices now; I guess only kids with rich parents can afford to read them, as well as play WarHammer 2K.

The quality is much better, though... but I stopped reading comic books in high school; they were about the price of a book, but lasted a twentieth of the time.

I remember when my DC comics went up in price from $0.10 to $0.12, a 20% jump overnight. Back then my allowance was about a dollar a week, so that put a crimp in my weekly budget.

Some years later, when the price of Marvel comics jumped from $0.12 to $0.15 that wasn't too much of a burden, even though it was a bigger increase in real terms. But by then I was working as a box boy in a supermarket and taking home the princely sum of $15/week (average tips for two five hour shifts). I didn't much care that some other kid who was still getting a dollar allowance got hit with another 20%+ jump in price...not my problem, I was rich enough to absorb the increase.

From my story on MarketWatch:

Adjusted for inflation, real weekly earnings dropped 0.8% in July and are down 3.1% in the past year, the second fastest decline in 26 years. In the past three months, real weekly earnings were falling at a 9.4% annual pace.
The purchasing power of the typical worker has now fallen back to 1998 levels, despite a 29% increase in productivity over that period.

The last line in Rex's story says it all.

Swan: But for many consumer products, including most food products, I think we are in effect getting noticeably harder...

See? Watermelon works just as good as the pills!

"Along with the recent decline in energy prices and a rally in the value of the dollar, the soft labor market numbers should ease the pressure on wage growth, Reaser says. She adds that next month's inflation numbers should look better, given the 20% drop in the price of crude oil since mid-July.
But what's good for the Fed, in this case, is bad for consumers. Combine a slack labor market with falling prices for stocks and houses, and it's clear that Americans' finances are getting stretched by the month - with no end in sight.
"The American worker does not have a whole lot of bargaining power right now," says Simons. "We're looking at the impoverishment of the American wage earner.""

"The Labor Department also reported that workers' average weekly earnings declined by 0.8% in July and 3.1% over the last year, even after adjusted for inflation."

Shouldn't "after adjusted" be "before adjusting"? If earnings declined before inflation, wouldn't they look even worse (ie., be a more negative number) after adjustment?

I have been awake all night depressed about a case I encountered yesterday. A single mom with a reasonable working class job, but a job in a business that has slowed so she doesn't have the opportunity for overtime, a deadbeat dad and an adjustable rate mortgage.

My paralegal and I worked for hours yesterday and try as we might we couldn't figure out a plan to keep her and her child in their modest home. We tried everything. We failed. She and her child are going to lose their home. When your house payment is 1/2 of your take home income, your income is declining and your house payment is going up, remaining in your home is not an option.

Oh well the pain of regular Americans is of no concern to the mighty Wall Street Journal, Washington Post and New York Times.

'In the US, nearly all the benefits of growth in the past decade have accrued to the top 10 percent of society; while the top .01 percent has seen incomes grow 112 percent, the incomes of the bottom 90 percent grew by only 2 percent. The benefits of global growth accrue to fewer people. The richest 1,100 people in the world today have a net worth that’s almost double that of the 2.5 billion people earning the least.' Superclass and the Inequity of Globalization David Rothkopf YaleGlobal, 14 May 2008 http://yaleglobal.yale.edu/display.article?id=10803