Private pay shrinks to historic lows, government handouts soar...

[posty]

http://www.usatoday.com/money/economy/inco...te-sector_N.htm

 

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

 

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

 

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

 

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

 

The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries.

 

The Bureau of Economic Analysis reports that individuals received income from all sources — wages, investments, food stamps, etc. — at a $12.2 trillion annual rate in the first quarter.

 

Key shifts in income this year:

 

• Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.

 

•Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

 

The shift in incomeshows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

 

"It's the system working as it should," Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says.

 

Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University says the riots in Greece over cutting benefits to close a huge budget deficit are a warning about unsustainable income programs.

 

Economist David Henderson of the conservative Hoover Institution says a shift from private wages to government benefits saps the economy of dynamism. "People are paid for being rather than for producing," he says.

[dmarc117]

well that one promise kept........redistribution

[Ursa Majoris]

 

[rattsass]

well that one promise kept........redistribution

...let's remember Bush got the ball rolling when he redistributed billions with his bailouts. Obama is just carrying the torch right now, and has seemingly perfected the art.

[Perchoutofwater]

 

I'm not sure what you find humorous about that. I find it a sad commentary on where we are today, and an indicator of an even rougher tomorrow if something isn't done to reverse the trend.

[i_am_the_swammi]

The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries.

 

 

The shift in incomeshows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

 

"It's the system working as it should," Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says

 

Also, as the economy recovers, there will be less of an emphasis on employing stimulus funds to jumpstart the economy. Relying on them less will naturally decrease the percentage they contribute to the overall US wages paid.

 

nothing really to see here, other than this bland USAToday article reporting that the sky is blue.

[Yukon Cornelius]

:tup:

this

[evil_gop_liars]

this

 

+1

[TimC]

The trend is not sustainable, says University of Michigan economist Donald Grimes.

 

It's nice to hear reason from an economist from a real school for a change.

[Azazello1313]

The shift in income shows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

 

bingo. if the goal was redistributing, or "shifting" income, as someone at the far-left CBPP would assert, then stimulus efforts have been effective.

 

on the other hand, if the goal was creating jobs and stimulating growth in the private sector....total epic fail.

 

which was the real goal?

Edited May 25, 2010 by Azazello1313

[Big John]

It's nice to hear reason from an economist from a real school for a change.

As in paying you off to move to Michigan?

[TimC]

As in paying you off to move to Michigan?

 

That was pre-recession when Michigan wasn't a total craphole. Now that the entire state is, including the Canadian part of UP, my price is up to 10 million dollars.

[i_am_the_swammi]

if the goal was creating jobs and stimulating growth in the private sector....total epic fail.

 

which was the real goal?

 

how so?

 

If the stimulus funds were used to spur government-sponsored jobs (state highway improvements come to mind, juts off the top of my head as an expample).....and those improvements relied on workers and materiels and equipment produced by private contractors, who otherwise may have been laid off had those orders not come in....

 

how is that a total epic fail?

[bushwacked]

how is that a total epic fail?

 

Well you can believe the consensus economic opinion, the CBO, or Az. Take your pick.

Edited May 25, 2010 by bushwacked

[Azazello1313]

unemployment, promise vs. reality

 

in april 2009, there were 108,861,000 private non-farm jobs

in april 2010, there were 107,590,000 private non-farm jobs*

 

so the economy is down 1,270,000 private sector jobs since the stimulus was passed. and again, look at the first link in this thread -- private pay has shrunk to all-time historical lows as a percentage of all income.

[bpwallace49]

so the economy is down 1,270,000 private sector jobs since the stimulus was passed. and again, look at the first link in this thread -- private pay has shrunk to all-time historical lows as a percentage of all income.

 

 

Epic fail on the free market. They clearly hate America, main street and Joe the Plumber . . . .

[TimC]

how so?

 

If the stimulus funds were used to spur government-sponsored jobs (state highway improvements come to mind, juts off the top of my head as an expample).....and those improvements relied on workers and materiels and equipment produced by private contractors, who otherwise may have been laid off had those orders not come in....

 

how is that a total epic fail?

 

Because we paid $300,000 per job of my tax dollars for 5 American idjuts to stand around supervising one illegal Mexican filling a pothole. Or close to it.

Edited May 25, 2010 by TimC