Funny Money

by Osman Parvez
No doubt you've heard this sad, sad story. In the past, each generation of Americans saw better standards of living and higher pay. But today, the situation has changed. Wages have been stagnant for years. The American middle class is struggling, and now work longer hours for less money.

Oh, but is it really true?

Those decrying the end of the middle class would have you believe so. However, the analysis that most commentaries cite ignores fringe benefits. Because fringe benefits, including health care coverage, impacts standard of living. Once you add this back (and use a more appropriate measure of inflation), average hourly wages have risen by 16% over the past 30 years.

Looks like the Doom and Gloomers got this one wrong. Oops?

From the Federal Reserve Bank of Minneapolis
Rather than falling by 4 percent over the past 30 years, average hourly earnings have actually risen by 16 percent. Growth in the median hourly wage went from 12 percent to a more respectable 28 percent.

Click the link to the article (above) for a very thorough analysis and discussion.

What are fringe benefits? From the Wikipedia definition:
Fringe benefits can also include but are not limited to: (employer-provided or employer-paid) housing, group insurance (health, dental, life etc.), income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing, funding of education, and other specialized benefits.

image: material boy

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Please Note

This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.