WHY OIL AND WAGES DON' T MIX
July 2, 2008
The real problem in the U.S. economy today is not the price of oil -- it's the stagnation of wages, says the Ben Stein, a lawyer, actor and economist.
- From 1947 to about 1973, real hourly pay for nongovernmental workers rose by about 40 percent.
- Since then, real wages both hourly and weekly for all nongovernment workers, on average, have fallen by about 5 percent.
- The average private worker now earns roughly $600 a week; gas may cost this worker close to one-tenth of his or her earnings.
- The average driver travels about 12,000 miles a year, and if he or she gets 15 miles per gallon, the annual gasoline bill would have been about $3,200 a month ago and close to $3,600 now.
This is a dismal trend, says Stein. The federal government can do little to make the price of oil fall in the short run, except for one basic thing: balance the budget.
The world price of oil is denominated in dollars. The dollar is weak for many reasons, but a big one is the immense budget deficits run by our government. Balancing the budget would be an important first step towards bringing down the price of oil and gasoline, says Stein.
Source: Ben Stein, "Why Oil and Wages Don't Mix, New York Times, June 29, 2008.
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