The Nation: Inflation's Undertow

[marmar]

posted August 3, 2007 (web only)
Inflation's Undertow
Nicholas von Hoffman



After ten years, the minimum wage was finally raised on July 24 from $5.15 and hour to $5.85 an hour. A person could have gone deaf listening to the Democrats boast about what they had done. Maybe it was the best they could do, but it was still not much.

Thanks to the relentless, quiet inflation the new minimum wage will be worth almost $2 a hour less than the minimum wage was worth ten years ago. That is after the raise, not before. To equal the $5.15 minimum wage workers received in 1997, they would have to be paid $9.05 an hour. Then they would merely break even. So when politicians talk about having "raised" the minimum, they are, to put it charitably, misleading the American people.

Attention all you people with 401(k)s! This inflation stuff hits you, too. Forget the undocumented and the single parent children growing up with a flirtatious relationship to the poverty line. Let's talk about you with the retirement account.

On July 19, the S&P 500 index, designed to track the value of a wide variety of American stocks, reached a new high. (The S&P 500 stocks is a better measure of the market than the Dow Jones which only includes thirty stocks.) Sounds promising. But read what David Leonhardt wrote in the New York Times about this record-breaking occasion: "the S.& P. remains 17 percent below its inflation-adjusted 2000 peak. A share in a mutual fund tied to the S.& P. 500, in other words, can't buy nearly as much today as it could in early 2000." ......(more)

The complete piece is at: http://www.thenation.com/doc/20070813/howl2