Economic illusions: Economy improving but wages dropping


The BLS (Bureau of Labor Statistics) and the Obama administration keep pushing out figures that illustrate the economy is improving, unemployment is dropping and that things are getting better. Getting better based on whose perspective; are these people on drugs.
  • More men and women are working than ever before, yet families can barely make enough to cover their monthly expenses
  • The cost of education is rising faster than wages
  • Rents are rising faster than wages
  • The cost of medical care is rising faster than wages
  • The cost of food has risen faster than wages over the past seven years.

We could go on, but we will stop there as we listed the most important factors and based on these factors the only common trend we see is that people are working more, for less money. In other words, they work like dogs and yet can barely pay the bills.

Economic illusions: Economy improving but wages dropping


There are many factors at play here that are contributing to lower wages, but the prime driver appears to be corporate gluttony.   Corporations are using billions of dollars to repurchase shares instead of investing the money in their companies.  This technique  artificially boosts the earnings per share metric (EPS) and it is done without any hard work. As rates are very low right now, corporations can borrow money for next to nothing and use these funds to buy back their shares and in the process magically boost earnings.  This is done without spending money on new equipment or hiring new workers. It is fast, simple and fraudulent but the government is not prosecuting anyone so this trend will continue. We covered this recently in an article titled “share buybacks just another Wall Street Scam” 

Then we have other trends as noted by Peter Cappelli, a professor at Wharton School of Business.  He states that many retailers base manager’s bonuses on whether they can keep labour costs below a certain level. If these managers blow the budget ceiling they blow their bonuses away too.

As a result of these actions, the percentage of corporate income going to workers has dropped like a rock and is now at the lowest level since 1951. The Economic Policy Institute  has stated that the labour’s share of corporate income has cost workers $535 billion annually; put in another way it has cost $3,770 per worker.

There is only one way to win this filthy game and that is for you take control of your finances. Do not trust Wall Street or your government to take care of you. There is a saying God helps those that help themselves and the devil all those that fall in between.  Learn how to use Mass Psychology to be on the right side of the markets and how to make sure you do rot in your Golden years.  Subscribe to our Free Newsletter and learn how to be on the right side of the markets instead of always following the herd that always does the wrong thing and precisely the right time.


Other interesting stories:

Investors worried about a stock market crash 2016 (Jan 21)

Is VIX pointing to a Stock Market Crash in 2016  (Jan 20)

Oil crash: Is the price of crude heading lower in 2016 (Jan 20)

6 Rules to making money in the Markets Using Mass Psychology  (Jan 20)

The U.S Economy in Crisis: Obama’s illusory economic recovery (Jan 19)

The Dow Jones Industrials & the economic recovery that never was (Jan 18)