Feburary 2, 2006
Corporate Greed is Reason for Wage Decline, not Health Care Costs
In an interview with the Wall Street Journal, the president’s economic advisor blamed the rising employer health care costs as the reason workers haven’t had a wage increase. “Employers are spending more money on health care, and that’s robbing people of wage increases,” Allan Hubbard said (WSJ,
In the EPI’s analysis, The Wage Squeeze, economists show that while corporate profits rose in 2005, overall compensation (wages and benefits) failed to keep up with inflation. They concluded that the recent squeeze on wage growth is coming more from company’s profits--not just from health care costs. Here’s why:
- Almost half of the workforce (47%) did not get health coverage through their job in 2005 (Bureau of Labor Statistics).
- Low wage workers, those least likely to get health care, experienced the greatest loss in terms of real wages.
- Corporate profits rose 34% last year, but the share toward worker’s compensation decreased 33%. These almost identical figures show that the decline in wage growth appears to be coming from company profits, rather than health care costs (Bureau of Labor Statistics).
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