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A bittersweet taste in wages
Take-home is shrinking, which is bad news for the economy as well as individuals.
February 4, 2004: 10:34 AM EST

One more reason for inflation to remain subdued while the economy forges ahead came in this week. It was the latest personal income report, which actually showed wages and salaries shrinking in December.

In fact, wages grew at just a 1.9 percent annual rate in the fourth quarter of last year.

This is certainly not a plus for the economy because our wages are the raw material needed for our spending.

But if you're an employer -- and/or an investor looking for juicy profits -- it's a bittersweet plus: One more sign that are enough unemployed and underemployed and just plain insecure people around that many workers are just satisfied to hold to their jobs let alone ask for a juicy wage hike.

Another interesting aspect of the personal income story is that wage growth was even weak in the services industry -- think office workers, professionals, retail clerks, etc.

Isn't this the part of the economy that's supposed to be immune from international competition which batters down factory wages?

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In large part, of course, services wages are more protected because it's tough to outsource a job that requires the worker to be physically located in a particular place, like a doctor or teacher.

But even services are not immune to the fact that there is a large pool of people available to work, eager to trade up to a better job if they can find one. Until the job market engine is humming, wages are likely to stay in low gear.  Top of page


Kathleen Hays anchors CNN Money Morning and The FlipSide, airing Monday to Friday on CNNfn. As part of CNN's Business News team, she is also a regular contributor to Lou Dobbs Tonight.




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.