Foreclosures behind the Stagantion of Worker’s Wages

Posted on August 29, 2008
Filed Under Repo Homes |

A new survey concludes that the foreclosure crisis is behind the stagnation of the wages of workers. The foreclosure tsunami has been raging for over a year causing havoc in the real estate market and affecting the functioning of the financial bodies. Pennsylvania is one of the worst affected regions according to Keystone Research Center of Harrisburg.

Mark Price and Stephen Herzenberg of KRC, opine that the wages of the workers of Pennsylvania are stagnating. Income is being concentrated among 1% of those who earn causing the imbalances to reach the level of the 1920’s. To the middle class of Pennsylvania the economic scenario could not be worse.

According to the report “with the Democratic and Republican national conventions around the corner “ the situation is serious here because Pennsylvania is a ‘swing state’. The presidential candidates could do well to focus on the economy of the Commonwealth. The candidates have been asked to take note that the hardworking people of Pennsylvania “have the power to tell the candidates – loudly and clearly – that our nation needs new and creative economic policies that are friendly to business and families.”

Against the background of the foreclosure crisis, since December 2007 nearly 4,500 jobs have vanished. The unemployment rolls of the state have gone up to 62,000. But the point is that even before the economy had started to stumble the workers were not doing well. The economic growth has been slow with the working population’s share in it declining. The wage structure was pale and anemic – to say the least. It made it impossible for the struggling workers to keep pace with the inflation.

The report shows that in 2007 the wages were 1.6% below the levels reached in 2001. With the worsening of the foreclosure crisis it seems the situation will worsen and fall to even lower levels. Inflation is growing by 5.5% per year. From 2001 to 2005 the average earnings of a typical Pennsylvania worker (the lower strata) fell by 4%. In contrast the incomes of the rich Pennsylvanians increased by 31% during this period. The income of the super rich increased by 47% during these years. Thus the richest group on top grabbed the 79% of the total growth. This is an alarming reverse movement from the 1990’s. The only sparkle in the gloom was the time of the housing boom from 2001 to 2007 but lately even that has vanished.