Wage Gains 2006
Wages & Benefits Show Healthy Gains

Current-dollar personal income increased $214.5 billion (7.4 percent) in the second quarter,compared with an increase of $109.1 billion (3.7 percent) in the first. The acceleration primarilyreflected an acceleration in personal current transfer receipts due to the effects of the rebates toindividuals who pay no income taxes (or for whom the rebate exceeded the amount of taxes they pay)from the Economic Stimulus Act of 2008.

Personal current taxes decreased $178.9 billion in the second quarter, in contrast to an increase of$20.7 billion in the first. The sharp downturn reflected the rebates to individuals with tax liabilities,which are treated as an offset to taxes.

Disposable personal income increased $393.4 billion (15.9 percent) in the second quarter,compared with an increase of $88.5 billion (3.5 percent) in the first. Real disposable personal incomeincreased 11.3 percent, in contrast to a decrease of 0.1 percent.

Personal outlays increased $143.6 billion (5.6 percent) in the second quarter, compared with anincrease of $95.7 billion (3.8 percent) in the first. Personal saving -- disposable personal income lesspersonal outlays -- was $284.9 billion in the second quarter, compared with $35.1 billion in the first.The personal saving rate -- saving as a percentage of disposable personal income -- was 2.6 percent inthe second quarter, compared with 0.3 percent in the first. Saving from current income may be near zeroor negative when outlays are financed by borrowing (including borrowing financed through credit cardsor home equity loans), by selling investments or other assets, or by using savings from previous periods.For more information, see the FAQs on "Personal Saving" on BEA's Web site. For a comparison of personalsaving in BEA's national income and product accounts with personal saving in the Federal Reserve Board'sflow of funds accounts and data on changes in net worth (which helps finance negative saving), go tohttp://www.bea.gov/bea/dn/nipaweb/Nipa-Frb.asp.

U.S. productivity rose dramatically and labor costs fell in the third quarter,

Factory orders rose in October.

Demand for expensive goods was not as weak as earlier estimates, Capital spending by businesses dropped, by some measures.

Growth in the economy outside the manufacturing sector cooled in November, amid a slight rise in price pressures.

Nonfarm business productivity rose at a 6.3% annualized rate between July and September.

Last quarter's gain was the biggest in four years and nearly triple the 2.2% rate in the second quarter.

Unit labor costs fell 2% last quarter, the biggest drop since 2003.Third-quarter labor costs were up just 3% from a year ago.

Hourly compensation increased 4.2% last quarter. Real compensation, adjusted for inflation, rose 2.3%.

Manufacturing productivity increased 5% last quarter.

July 25, 2007

In 2006 wages had their fastest rise in 30 years rising by a full 2% adjusted for inflation.

Also the Congressional Budget Office has recently come out with a report showing those in the lowest quintile had an almost shockingly large gain in income of over 30 % since 1990, the largest of any quintile.

Again, optimism among Americans is running as high as it has been for years despite the never ending class warfare of the Democratic Party and its many enablers in the Mainstream Media.

There is much talk about income inequality.

What is practically always stressed is how much more one group has than another..

However if the least of us has much much more now than we did in years past that's what should really be highlighted. And we do.

Those in the lowest quintile now are enjoying a lifestyle as much as those in the middle quintile did in the 1970's.

Finally much of the disparity is caused by the amount of education one has attained, and by the influx of illegals who are less educated.

Income is also dragged down considerably by unwed mothers.

June 6, 2007

Worker gains continued their healthy rise in May up .06

The pace of rising wage gains is now faster than it was in the expansion of 1990,s, as the latest data from the Department of Labor reveals.

What is great news for average workers also makes the stock market very jittery because of the possible tie in to inflation.

Worker happiness though is enhance by the fact that when a long trend of wage gains-as is now the case-happens, the labor market remains tight giving workers much brighter prospects.

In December the number of net jobs created was 167,000, far exceeding the 100,000 that analysts had predicted. The gains in wages were strong enough to make markets jittery about interest rates.

Has this good news for workers received the attention that one would expect from the Mainstream Media? When Democrats and Republicans have debated the state of the economy and the effect of the tax cuts, what have the talking points been?

Hasn't the main argument from Democrats been that the benefits are going mostly to the rich and the average American worker has gained little?

Let's examine the data on wages and benefits to get the real picture.

Through November 2006 average hourly earnings had increased 4.1%, over the previous 12 months. Adjusted for inflation, that rate has been 2.8%, the fastest rate in six years.

Wasn't it as recent as the 2004 election that we constantly heard the words, jobless recovery? Didn’t Senator John Kerry use those words once or twice? The new net jobs figure is 7 million plus.

Just as in the 1990's, when it took several years for worker productivity to catch up to economic growth, the trend is being repeated.

The highpoint for gains in the 1990's took place in 1997. So even though present gains are about 2% below that highpoint, they are closing in fast. If present tax rates, and business incentives are not tampered with, this decade's gains should surpass those of the 1990's

There has been some cost shifting from employer to employees. There are more 401K's and less traditional pensions-those with defined benefits-than previously. Is there anything wrong with the numerous benefits of 401K's?

Rising health care costs are calling for some increases in co-pays by employees. Should employers be expected to shoulder the full burden?

At any rate the net results for benefits, reported by the Labor Department tells us that benefits have risen at an even higher rate than wages, rising 39% since 2000.

That's the picture for wages and benefits.

As for taxes, workers have also been able to keep substantially more of what they earn.

At every level of Adjusted Gross Income, the percent of income taxes paid, as well as the actual dollar amount paid, is down. Recall, the Bush tax cuts were in two phases.

Examining for example a taxpayer with Adjusted Gross Income-AGI of $35,000, his/her Final Net Tax, going back to 2000, before each cut, was $2989. His/her Final Net Tax is now $1792, saving that taxpayer $1197 a year.

The Department of Labor has just released December 2006 jobs data. Wage gains are up another 0.5%. The unemployment rate remained very low at 4.5% suggesting a continued tight labor market and continued worker gains, for the foreseeable future.

The 110th Congress convened several days ago. We would be wise to let them know, we would not appreciate any politicking that would slow down the momentum brought about by the recent tax cuts.

Issue Number: IR-2007-38

Inside This Issue

Feb. 26, 2007

IRS TOLL-FREE HELP

Free tax help from the IRS is just a phone call away. The IRS provides various services through its toll-free telephone numbers. Some of these services are available 24 hours a day.· Ask questions about your tax return. You can call the IRS Tax Help Line for Individuals at 800-829-1040, to get answers to your federal tax questions. · Order forms and publications. Call 800-TAX-FORM (800-829-3676). Copies of forms, publications and other helpful information are also available around-the-clock at the IRS Web site at www.irs.gov. · Check the status of your refund. Call the Refund Hotline at 800-829-1954. You will need to know your social security number, filing status and the exact whole-dollar amount of your expected refund. TeleTax, the automated refund line, at 800-829-4477 is available around the clock and will also let you check the status of your income tax refund. Automated refund information is generally available four to five weeks after you have filed your tax return. You can also check the status of your refund at IRS.gov by clicking on Where’s My Refund? This service is available 24 hours a day, seven days a week. · Recorded tax information: The TeleTax line at 800-829-4477 has recorded messages covering more than 100 tax topics. Topics include items such as Who Must File?, Highlights of Tax Changes, Education Credits, Individual Retirement Accounts, Earned Income Tax Credit, What to Do if You Can't Pay Your Tax and more. · Hearing-impaired individuals with access to TTY/TDD equipment. Call 800-829-4059 to ask questions or to order forms and publications. This number is answered only by TTY/TDD equipment. The IRS Tax Help Line, Refund Hotline, and the TTY/TDD numbers are available from 7:00 a.m. to 10:00 p.m. (local time) on weekdays. Alaska and Hawaii will follow Pacific Time. The services offered on the IRS toll-free lines are also available 24 hours a day 7 days a week on the Internet at IRS.gov.

When the old stock and the new stock are identical the basis of the old shares must be allocated to the old and new shares. Thus, you generally divide the adjusted basis of the old stock by the number of shares of old and new stock. The result is your new basis per share of stock. If the old shares were purchased in separate lots for differing amounts of money, the adjusted basis of the old stock must be allocated between the old and new stock on a lot by lot basis.

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