Lowest Wage Growth in 25 Years
According to the Labor Department wages grew at only 2.3% for the 12 months ending this past September. What makes this somewhat notable is that profits for corporations have been growing at a pretty substantial rate. Once inflation is factored in for wage growth real wages actually decline.
One of the big factors for the dismal growth rate of wages is the rapid growth in health care costs.
As health care costs have exploded, benefits paid to workers have accounted for a good portion of the growth in total compensation in recent years.
With their wages growing at an annual pace of 2.1 percent, union workers are barely keeping up with nonunion workers. The growth in benefit-spending for union workers snapped back to 4.1 percent in the past 12 months from 10.6 percent the year before.
One solution to this might appear to be some sort of government health care system such as Canada has. The problem is that while wages would likely rise (in competitive markets), those gains would likely be used to pay for increased taxes for the health program. Some have argued that there would be a substantial cost savings by such a switch, but I am far from convinced that such savings are possible while at the same time maintaining quality and quantity.