Posts Tagged ‘gasoline’

WSJ OPINION: THE COST OF DISASTER

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Gas wars

Posted: 18 January 2015 in Uncategorized
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More than five years into the recovery from the Great Recession and employers are still not willing to raise workers’ wages. As a result, real median household income in the United States has fallen dramatically—and threatens to stay down for the foreseeable future.

As I wrote back in December, the best they can come up with—in the face of stagnant wages and incomes for workers and their families—is the decline in oil prices. Employers aren’t willing to pay workers any more than they currently do but at least the working-class will have a bit more in their wallets and pocketbooks because the prices of oil to heat their homes and gasoline to run their cars continue to decline.

For working people like April Smith and her husband Eddie, “the decline in energy prices means being able to put meatloaf on the table instead of serving their four children hot dogs, ramen noodles and macaroni and cheese.”

But Smith understands what’s going on:

“Us small people, we just see it go up and down, up and down,” she said. “We throw a party when it’s down — but not too much of a party because we know it’s going up.”

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Chart of the day

Posted: 12 December 2014 in Uncategorized
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This is how bad things have gotten for American workers: they haven’t gotten a raise in years, and they’re not going to get a raise anytime soon—but, with the decline in gasoline prices, their stagnant wages are going to be worth more. Just like a raise.

OK. I suppose.

How much more? According to the Wall Street Journal,

If prices were stay at their current levels under $3 a gallon, the American consumer could save an average of $380 during the coming year, up from $83 since prices first declined this past summer, according to research firm ClearView Energy Partners. A separate estimate from IHS Global Insight says the average family could save $750 during the next year. By comparison, the median U.S. income grew by just $181 last year from a year earlier after adjusting for inflation.

A whopping $380 a year—if, that is, prices stay under $3 a gallon for the entire year.

Moreover, the chart above suggests that the lowest-income households will benefit even more than the middle or top—because expenditures on gasoline make up a bit more than 12 percent of their disposable income.

Let’s remember how much we’re talking about here: the average after-tax income of someone in the bottom 20 percent is $13,300 a year. The drop in gasoline prices doesn’t represent a raise for someone living on that amount of income. Just a bit of extra change to continue to try to make ends meet.

But American corporations have mostly written off those at the very bottom anyway. They certainly won’t pay the working poor decent wages and, for the most part, they don’t expect them to be buying a lot of the stuff they sell.

As for everyone else, employers don’t want to pay them higher wages either. But they are hoping that, as a result of the decline in gasoline prices, those who work for a living will be willing to spend a bit more on the stuff their employers are trying to sell.

lower gasoline prices “can be nothing but positive” for the U.S. economy in the short run, said AT&T Inc. Chief Executive Randall Stephenson last week. “That’s more money for smartphones and iPhones,” Mr. Stephenson said on a conference call with reporters.

Yep, that extra $1.04 a day is going to go a real long way!

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