Why working for someone else is a bummer

Discussion in 'Economy' started by -Cp, Apr 12, 2005.

  1. -Cp
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    -Cp Senior Member

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    Inflation: Why you're not getting a raise this year

    I'd like to preface this article by saying I can't tell you how many people I know of who say things like "If only I can get another job that'll pay me 5k more per year, then I can go out and buy xxxxxxx... .etc.." - Working in most jobs will only ever pay you more than the position is worth and rarely allows for you to keep up with the true cost of living through their meager "raises" which, in most cases, are not a raise but a "lesser".

    By the time you calculate a "10-percent raise" - into the fact that taxes went up 2-4percent, gas went up another 4 percent and prices have gone up on things another 6percent and you're now in a higher tax bracket, you actually have less spendable income... Someone care to tell me how that's a "raise"?

    Inflation: Why you're not getting a raise this year

    If you're like most Americans, don't count on a raise this year. The Los Angeles Times reported on Monday: "For the first time in 14 years, the American workforce has in effect gotten an across-the-board pay cut."

    In other words, inflation is back. The cost of living, measured by the federal government's consumer price index, rose 2.7 percent in 2004 and the first two months of this year. Wages rose an average of only 2.5 percent, according to the Los Angeles Times. A Wall Street Journal article, also on Monday, gave a slightly better figure: white collar workers received a 3.4 percent raise.

    The consumer price index is, however, a heavily-manipulated statistic that has been carefully crafted by the federal government to understate inflation.

    That means the once-mighty U.S. dollar is being devalued -- that is, losing its purchasing power -- much faster than 2.7 percent a year. This should be no surprise to anyone who's filled up a gas tank recently. Richard Benson has taken the time to dig beneath the surface and report these raw numbers compiled by various federal agencies:

    Gasoline: 47.5 percent increase from Nov. 2003 to Nov. 2004
    Crude Materials: 25.9 percent increase
    Groceries at supermarket: 6.1 percent increase
    Housing costs: 13 percent increase from 3Q 2003 to 4Q 2004

    Bill Gross, who manages the world's largest bond fund at PIMCO and knows something about this topic, calls the federal consumer price index a "con job." He estimates that the CPI is understated by at least one percentage point. Other estimates are far higher (again, look at prices for houses, gasoline, and college tuition).

    The implications of this are deeply disturbing. For one thing, if we accept that "real" inflation is perhaps 4 to 5 percent, a savings account with a 2.5 percent return before taxes is actually losing value every year. It's even worse when you take taxes into account. And if you own stocks that have gone sideways or down in the last year (PHLX Semiconductor down 19 percent, NASDAQ down 3 percent), inflation makes the bite exceptionally painful.

    Inflation doesn't happen in a vacuum. It's a consequence of the Federal Reserve "printing" scads of money through tactics like keeping short-term interest rates artificially low. In the beginning, this creates some welcome effects, such as "rising" home values. But then the inflation beast really starts to roar. As economist Ludvig von Mises said: "This ignorance of the public is the indispensable basis of the inflationary policy."

    At least this time, when your 2005 raise doesn't cover your higher 2005 expenses, you'll know who to blame.

    Link:
    http://news.com.com/2061-10786_3-5663927.html?part=rss&tag=5663927&subj=news
     
  2. dmp
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    dmp Senior Member

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    I'm up, on paper, 7% over last year...
     
  3. Huckleburry
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    Huckleburry Member

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    Nice post CP but are you really surprised? The Federal government has been spending money like water ever since Bush got into office. Many folks on this board have argued that this kind of spending is a stimulous to the economy and that tax cuts for the rich are actually really great and Blah blah blah. This is the effect reckless fiscal policy has on a economy. Rising interest rates, rising inflation, lower real wages and a decrease in the real standard of living. I wish I couldn't say it but frankly...I told you so.
    Huck
     
  4. rtwngAvngr
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    rtwngAvngr Guest

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    huck, you've been discredited so often it's bordering on the ridiculous. I shudder to think at the economy dems would've created in this circumstance.
     
  5. -Cp
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    -Cp Senior Member

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    First of all, I do agree with you that Bush spends way too much friggin money - I know he has a war to fund, but jeesh... Secondly, you're full of bullcrap if you think tax cuts are "only for the rich" - I'm not rich, but I've been getting nice tax cuts....

    My standard of living under Bush has never been better - bought a new home last year, my income will go up again this year.... I don't know what you're problem is... :D
     
  6. Huckleburry
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    Huckleburry Member

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    Right wing,
    Not that it is relevant but I am not a Dem. In addition, you have yet to posit an argument to discredit me. Finally, remember that period in the 1990's when more wealth was created than ever before in the history of the world, a time when inflation and unemployment fell. Well that period happened under a democratic president, how convenient of you to forget about it.
    Huck
     
  7. Fmr jarhead
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    Fmr jarhead Senior Member

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    ...how convenient for your to not mention that the bubble burst, and the 90's were rife with corporate theft, and a reecession was well underway when the Dems were finally voted out of office....but facts don't seem to be of any concern, do they Mr. Huckleberry?
     
  8. Fmr jarhead
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    Fmr jarhead Senior Member

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    As far as unemployment goes....there were more people unemployed in the 90's than today...but again...those pesky facts...damn, I wish I wouldn't bring those up, again.

    [​IMG]
     
  9. Huckleburry
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    Corporate thievery on behalf of Mr. Bush's personal friends. Yes the bubble burst but the recession could have been handled far more skillfully by say not introducing legislation that will raise the interest rate (tax cuts) or adopting a fiscal policy that led to crowding out. Yes the bubble burst, and yes their was a recession, however, Mr. Bush brought a great deal of his economic woes upon himself through short sighted legislation.
     
  10. Huckleburry
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    Clinton took office in 1993. He inherited most of the unemployment and then did a fine job reducing it over the eight years of his presidency. Where as Mr. Bush inherited low unemployment and thus far has done a fine job of raising it. You are right. Those facts are pesky
     

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