Slow Growth of Wages in U.S.

A few economists are finally noting the slow growth of wages during the past five years and attribute a great part of our continued economic slowdown to this negative development. Generally, the public has blamed wage increases for the lack of real prosperity.

Let’s look at the record. During the postwar years of the late 1940s and until 1980 our nation enjoyed a period of real prosperity. Wages were relatively high, prices were reasonable, inflation was low (except during the outbreak of the Korean War and the double oil crisis of the ‘70s) unemployment was in the 4% to 5% bracket, farmers prospered and interest rates were less than half of what they are today. The purchase of homes were not mere dreams for the young and middle-aged.

Yet, the public greets low wages with cheers of satisfaction.

One influential writer of his day, more than a century ago, noted that high rates of profit and high wages go together under our system.

The consumers, and only the consumers, can bring us out of the current economic letdown. They need buying power now and not a continued stretch of credit at outrageous interest rates.

One writer said recently, “Stagnating wages mean stagnating demand, and this will occur in an economy already stagnant, with close to 10% of potential workers unemployed or under-employed, with close to 20% of industrial capacity idle and with bankruptcies spreading across the Farm Belt.”

Our millions of unemployed, plus the millions of working poor, comprise a “state” of 50 million people, very few of whom are able to contribute to the tax coffers of our government.

Quarterly and annual reports show a decent measure of productivity. This has been headline material for several decades. The unfairness of our system shows glaringly in the paychecks of the workers, which, in itself, can cause a major depression. These workers are the consumers.

A continued and predictable insulting zero to 2% in annual wage increases will for a certainty cause a dearth in consumer buying in 1986 and beyond.

ROBERT K. GARRITY

Newbury Park