I'm afraid I don't have anything insightful to add, but as someone who's definitely on the short end of this stick I just wanted to thank you for posting this.

I don't know how bad things have to get before the corporate media will start addressing this issue in earnest, if they ever will. But maybe that's a stupid thought. As far as the corporate media goes, what's good for corporations and shareholders' bottom lines must be good for America, right?

My wages went up this week for the first time in 2 1/2 years - $40 a month!

That should cover the difference in the price of gas since this time last month. So I'm good. Oh yeah. This economy so totally rocks. I'm voting Republican.

Once again I must ask where you determined the rate of inflation; the CPI?

There are so many factors left out of CPI that it is just a joke.

Food (and not the false food basket) and energy being the two largest factors left out for skewing data for being too variable while technology products remain in.

How many tech products are people buying with gas at $3.05 per gallon; food prices up across the board; property taxes rising due to the appraisal lag from the housing boom?

Meanwhile we include large screen TV's price drops.

Do the wage growth numbers account for the number of people being laid off during the period and then accepting employment at lower wages? If one worker one gets laid off from a small manufacturing firm and then has to take a job a Wal-Mart what does this do your numbers?

The average wage at the manufacturing plant hasn't changed but the number of people earning that wage has decreased. The new Wal-Mart employee is getting crushed with the lower wage yet the Wal-Mart $.10 an hour wage increase gets counted as rising wages.

Without accounting for the changes in varying wage employment numbers creates a bias in the data.

Can you expand on the validity of your data?

FloridaDemocrat

Interesting, aMike. 

Not to be a two-handed economist, but on the one hand, you want higher gas prices to motivate us to seek alternative, greener energy sources.  On the other, for lots of people, filling the tank ain't a choice, it's a necessity, and you don't like to see it absorb so much of the paycheck.

It's my understanding (maybe I'm wrong?) that average and median wages are simply wages averaged (and the median taken) aross the board. So that if someone goes to work for less money the numbers are depressed by that fact.

On a much larger point something I would caution against: don't deliberately exaggerate the problems in the economy. Not everyone is in dire straits, there are many people like me who are doing OK, or even more than OK (though I suspect all of us hate the gas prices, worry about healthcare and so forth). When you start the "Everbody's starving, we're all doomed!" riff it destroys your credibility. I'm voting Democratic next year even if the GOP runs Jesus Christ and the Dalai Lama, but there are plenty of folks like me who may be sitting on the fence and an exaggerated message of doom and gloom will turn them of. You need to give people a positive reason to vote for progrsesive change.

...and another thing...

Take a moment to reflect on how much stuff American's buy today that they didn't buy 10 or so years ago--cell phones (in addition to land lines), paying per minute to talk and IM (how much more is the average persons' phone bill per month? especially young people who before never had their own phone--but had to share the family phone?, internet connections, downloads (games, music, movies, magazines), ipods, digital cameras, fees to use debit cards, look at the increases, too, in the cost of using credit--late fees, over limit fees, fees to pay on-line, fees if you don't pay on-line or electronically, check cashing stores, payday lenders, title loan lenders, paying to vote for the next American Idol or the next Dancer or to solve the CSI case and win $10k (and why isn't that considered gambling??). Think of all the new ways we spend essentially the same paycheck. It's no wonder our dollar doesn't go as far as it used to.

Hey, Jared.

How does the CPI take into account health care costs (if it does at all)?

In my line of work I'm fortunate to have health care coverage through my employer. But gradually, over the years, my weekly contributions (to cover the premiums) have gone up, and my benefits have eroded (larger co-pays and/or deductibles).

Does the CPI capture any of that?

When we consider health care costs (along with the points that mehitabel made above about all the stuff we consider "necessities" now, but didn't used to have to pay for -- how 'bout those cable TV rates, and internet access?), I think what's left over -- discretionary income, or savings (imagine that) -- must have fallen steadily over the last decade or so.

Is there an established metric for that? (Maybe the average weight of our wallets?!) A graph of that might best show what people are really feeling.

-- ARG

ARG and mehitabel--good points/questions--I'll do my next post on these and the other questions that came up re inflation and wage measurement.

I've been around long enough, unfortunately, to remember when gas was 21 cents/gallon.

Better than the alternative, Phelicity!
;-)

The message I get, repeatedly, is that each of the factors in the macro economy is in either stagnation or freefall. Or rocketing. When I was in college, I remember the price of a gallon reaching $0.98. That wasn't Carter, it was Reagan.

Now I'm surprised to see a gallon of milk (I drive by dairy farms in my extended neighborhood) going for $3.75.

This is globalization. The dollar, the corn, the tanker fuel, political influence are all no longer local or regional, certainly not national. And as the top dog, I'm surprised America doesn't realize things are quite precarious.

Those island nations heading for Atlantis when Greenland thaws aren't going to sink. People float. And those marginal island nations have been growing radicals for export. Seems they buy the argument that Western values threaten their way of life.

Tying this back to your post, it's funny that the industrialisation of the planet is going to submerge their little lands, but they're actually benefiting from oil prices relative the dollar's exchange rate while we tighten belts made in their factories.

Joe Monster, I don't know what part of the country you are in, but milk in the south is $4.25/gallon. I just paid $2.25 for a dozen eggs on Thursday! And we live in chicken country.

As for the other points:

We don't have cell phones - except for one prepaid for whoever is in the auto and may need a phone in an emergency

We don't pay the phone companies their outrageous prices; we've been on VoIP since 2003 with a flat fee for all our calls

internet connection is probably the one "sin" I could cut out. But downloads - we just don't go there. Period. And we don't buy cable TV either.

ipods, digital cameras

fees to use debit cards

look at the increases, too, in the cost of using credit--late fees, over limit fees

fees to pay on-line, fees if you don't pay on-line or electronically

check cashing stores, payday lenders, title loan lenders, paying to vote for the next American Idol or the next Dancer or to solve the CSI case and win $10k

We pay for the necessities. Nothing. More. There's no money for anything more.

We've suffered job losses and massive income loss since Poppy Bush and NAFTA. Our family is one of those who's income has dropped since the early 90s - dramatically. NAFTA and offshoring are responsible.

In the meantime, we wonder how we'll buy anything for the kids for Christmas this year.

Oooops!

We solve that by paying in person at the election/gas/internet company offices.

Should read:
We solve that by paying in person at the electric/gas/internet company offices.

Not paying your phone bill (or any other bills) can affect your credit rating with ALL of your other creditors. Late with a car payment? Your credit card interest jumps from 15% to 30%+. Some prospective employers will reject a job candidate because of a bad credit score.
Add this to the recent bankruptcy law that punishes the individual but lets corporations skate when they are in money trouble. Consider this convergence:
Your employer goes bankrupt. You lose your job. Your credit goes to hell. You declare bankruptcy. The bank takes your house.
The executives of the corporation get payouts if they didn't skip out before the fall, the corporation reorganizes after stiffing its employees and suppliers and voila, they washed their problems in your sink..

I actually remember 15 cents/Gallon, but as I recall, the minimum wage was also about 75 cents/hour. The regular price without prices wars was about 25 cents/gallon. Hey, we even had attendants who pumped the gas, filled the tires with air, and checked the water levels at no extra charge. Remember those?

I wonder how much of the current $100 /barrel price of oil is risk premium caused by the uncertainty that results from the failed occupation of Iraq and the Bush/Cheney bellicosity against Iran?

As for consumers setting the prices, that was when the oil producing countries took whatever the 'seven sisters' - the oil companies - would give them. But the oil producing nations watched what the Texas Railroad Commission had done to take control of oil prices in Texas as the Texas oil fields peaked, and those nations created OPEC. Since then the suppliers set the price. Another result has been the consolidation of the oil refining and distribution companies. I dated myself when I used the older nickname 'the seven sisters.'

OPEC and the consolidation of the big oil companies totally eliminated the power of the consumer on prices and made the oil companies into the profit machines they have become. In the bad old days before OPEC oil was a boom and bust business (and for independent production companies it still is somewhat.) Now the oil companies make a big profit when the price per barrel goes up, and a not-so-big profit when they go back down.

The capitalist propaganda we all get in school regarding supply and demand depends on suppliers and consumers who have roughly equal power, and who can - either one - walk away from the price negotiation when the other side gets too unreasonable. The really low prices occurred when there were a lot of competing oil companies, all of which had to keep refining oil in order to cover the interest on the money borrowed to build the refineries, pipelines, and oil supertankers. The oil companies couldn't walk away from the table. Consumers could always go down the street to a competitor. No more.

Now all the oil companies pay the same price for oil out of the ground. OPEC is essentially a single supplier - everyone else takes the price they set - my Macroeconomics instructor thirty years ago said cartels never last, but he was wrong about oil. The oil companies have consolidated so that there is little effective competition except at the distribution level. High volume distributors have lower cost per gallon, and they maintain their high volume by lowering prices a few cents. That's the only competition left to reduce prices for the consumer. Prices are set now by OPEC, with a risk premium set by the spot market to deal with possible interruptions of the flow of oil.

That's the way capitalism really works. Adam Smith in 1776 could not have imagined, but all most people get in school is Smith's supply and demand theory. But this isn't your village market.

NAFTA and offshoring are responsible.

We have an economy which CAN use every trained worker we produce. We just aren't investing in producing trained workers.

Even if we do, then we don't invest in providing a rewarding career path for the most critical of modern workers, engineers. Individual employers can't afford to train workers on the job, because they raises their costs and the smaller firms can't compete with the firms that don't spend on such training. Besides, when a firm spends to train an employee they become worth more and either have to be paid more or they go to another employer - which means the original company is stupid to have trained them. They won't get any benefit for their investment. Better to hire a foreign employee on an HB1 visa.

The result is that a lot of good engineers find their skills become outdated and the pay they can command peaks at about age 40. That's whey so many get MBA's instead of advanced engineering degrees. An engineer who gets an MBA is quitting real engineering.

This is a social problem the American economy is ignoring because it requires government action to properly allocate and share the costs of any solution other than hiring overseas. Unfortunately, the developing nations don't hesitate to use government action, and America is dropping behind them in innovation.

I agree entirely that there are a lot of problems with our current distribution of income and wealth and that too many people have seen stagnant wages and declining benefits. I've escaped that by trading up jobs, plus I have had a couple of significant salary increases (8% or greater) with promotions in my jobs. My main gripe is not with my wages but with the terrible insecurity of today's economy. The reason I've traded up on jobs is because I've also been through three layoffs. But my caution was simply this: A message of "Your life sucks but we're here to help" will fall flat. People have a preferrence for optimism, and will respond better to a message of "We're going to make things better."

Just as Socialism sounds good and would be so long as human beings didn't have to put it into practice.

And then there's this:

PROVIDENCE — The number of Rhode Island households that have lost utility service this year because of unpaid bills has reached an all-time high, and thousands remain without heat or electricity.

Utility companies in the state turned off electricity and natural-gas service to 29,970 customers through the first 10 months of this year, 18 percent more than in all of last year and the highest number since the state began tracking shutoffs in 1997.

Given the size of this state, this is a scary number.  And it's going to get worse.  The Providence Journal article linked above states that Heating Oil costs 81 cents per gallon more than last year--more than a gallon of gas, for that matter, at $ 3.18 a gallon.  I'm wondering if there's a national clearinghouse for information of this kind.  What say, Jared?

aMike

Large private companies will be ultimately driven out of business if they do not get their act together and deliver what people want. It is much more difficult to change entrenched government agencies.

I think the Socialism vs. Capitalism fit’s the argument very well.

As I understand your rambling screed, your premise is that large problems require large organizations, decisions must be made by administrators in anticipation of rapidly changing markets, and cannot afford to wait for negotiations and that governments are responsible for everything and everyone within its borders. Do I have that right?

That is the argument for state owned monopolies administered by expert planers, which is a good definition of Socialism. Capitalist think that competing organizations attempting to respond to market forces are more effective even though the organizations are large and potentially unwieldy and that governments are not responsible for everything and everyone but merely set and enforce the rules of commerce.

your premise is that large problems require large organizations, decisions must be made by administrators in anticipation of rapidly changing markets, and cannot afford to wait for negotiations and that governments are responsible for everything and everyone within its borders. Do I have that right?

But the problem is allocating resources rather than just anticipating markets. A railroad network can only have a single control center to route trains. A steel mill can negotiate to buy iron ore and coal each time they need it, or one of the companies can buy the mill and the mines and avoid the very expensive transactions involved in market negotiations among the three separate firms. The issue isn't meeting market changes. It is lowering the cost of providing the goods or services so that other, smaller firms can't compete at the price.

There is no real difference between the old Woolworths and Wal-Mart - except that Wal-Mart has a centrally controlled logistics network that lowers the cost of transportation to the level that other firms cannot compete with.

The effects of transaction costs is described in Transaction cost economics.

The larger organizations become subject to rigid and bureaucratic decision making by managers who know less and less about the actual work being done as they move up the hierarchy of the organization, so innovation (except in methods of financing) tend to suffer.

The difference between private industry and government is that a private business can simplify the goods and services it produces by restricting the market they serve. I'm not part of Apple Computer's market because I am priced out of their products, and when I worked in Accounting everyone used MicroSoft Office on Intel machines. I'm just not part of the market Apply services. Their choice rather than mine. I don't fit their stereotype customer, the one they produce for.

Since government has to deal with and provide services to everyone in their geographic boundaries. They can't select an easy to serve market and ignore the rest. So government has to be large, and has to provide services on a one-size fits all basis, or something close to it. So governments create a hierarchy of organizations with each specializing in what it does, from federal government down to state, county, city and specialized organizations like Texas' railroad police.

Governments are automatically a lot more rigid than private business organizations, even the largest, because governments can't limit who they serve except geographically. That means that governments can't serve private markets well, but the techniques of managing organizations to serve private markets do not work well for managing government. That pretty much eliminates most socialistic enterprises.

Besides, the main force that drives government is power, while the main force that drives private business is profit.

I could also go into the difference that government has the power to tax and the money to operate the organizations is fed in mostly at the top by legislators, while private businesses have an administratively managed value chain that acquires the inputs of production (Land labor and capital) in a market transaction usually, then administratively adds value to the inputs by processing the inputs, and sells the results into another market. Note that the funds to operate the business from the final market transaction, but the rest is all done administratively (based on power) just like government.

Because the focus of a private business is a value chain, government central planners need not apply, so forget socialism. It was in theory supposed to apply to businesses, because government already worked reasonably well and the American and French revolutions gave a lot of people the idea that government could be controlled by the people. But Government can't run businesses, because what government does best usually means applying very standardized solutions to predefined problems (police, courts, national security, administering a single national health pool for insurance purposes (but not actually providing the services) etc.)

As I say, capitalism and socialism are much too simplified to begin to describe what is really happening.

I'm thinking moving sidewalks, like on the Jetsons.