W. Alan Beckelheimer "Something To Think About ..." Published Sept. 15, 2004

August employment report shows 144,000 new jobs, widespread salary deflation

The job reports for August were released the morning of September 7, and while the economy created 144,000 jobs, a marked trend towards salary deflation was also evidenced by the report.

These numbers demonstrated a reversal of the negative trend witnessed by the July release, which accounted for only 73,000 new jobs nationwide.

It is still glaringly clear that despite the spike in job creation in August, the economic recovery America was supposedly experiencing has slowed significantly. For the first six months of 2004, the growth in the national payroll averaged approximately 200,000 new jobs. Job growth for the second half of the year has faltered noticeably.

A pattern of salary deflation in the national economy is also evident from the examination of current employment numbers.

Economic trends are such that any advances in employment growth are stymied by as much as 30 percent reductions in salary for these new positions. For example, a $9 an hour job has been reduced to paying approximately $6 an hour and salaried positions of $60,000 have been slashed to near $40,000. Therefore creating 200,000 jobs at a wage markedly lower than in previous years makes the net increase of jobs almost negligible.

When Americans' burden of debt remains constant, or experiences a rise (such has happened in the past four years), and the salary for employment deflates, the tendency for living hand to mouth becomes dominant.

Expenses such as the ever-increasing price of gas, the increase in consumer goods made from metal, inflated prices of milk or increasing mortgage rates become a much more powerful burden for Americans to shoulder than they would otherwise be.

Basically, salary deflation causes the same reaction in the economy as inflation. The price of items that consumers buy doesn't necessarily rise, but the percentage of a person's income needed to purchase such items does increase.

Salary deflation isn't well known as a phenomenon because it mostly affects newly hired employees. It is very rare in our economy for salaries of existing employees to be lowered for the sake of retention issues. How many times in your working life have you actually received a pay cut?

Salary deflation also has the effect of hampering the efforts of those who are unemployed and are attempting to get back into the work force as a productive citizen.

A possible cause of the recent rise in salary deflation in America is offshore out sourcing. This economic phenomenon has the effect of eliminating business opportunities for small business owners. Small businesses in America make huge contributions to the national gross domestic product and employment numbers, yet current out sourcing trends threaten to eliminate the small business owner from competition and thereby further harm the American economy.

Cumberland County has experienced these problems first hand with the closing of businesses that couldn't compete with Wal-Mart and the transfer of Avery-Dennison to Mexico.

What this will do in the long run, if steps are not taken to correct it, is strip America of its middle class. Our society has always been supported by those willing to work hard for a living wage. But more and more American families are being asked to raise their families on $7 or $8 an hour. It is amazing that so many people are able to scrape by and struggle to make it work, but sad that there are 1.2 million of our fellow Americans that have been pushed into poverty by recent out sourcing trends.

Yes, business may be king, but if it continues to march onwards toward the singular goal of making profits at the expense of the working man, it might have to abdicate the throne.

Nationally, salaries should rise as the current imbalance between supply and demand for new employees slowly improves. However, the influence of the far reaching global economy makes the fruition of these trends occur at a painfully slower pace than has been the case in past economic recoveries.

What steps can you take to help reverse this trend?

First and foremost, buy American made products whenever possible. The more of our money that we can reinvest in our nation's economy, the less we will be forced to import from other nations. If this trend could catch on, I believe it could send a message to businesses, letting them know that Americans chose American products and aid the reversal of the staggering trade deficits that currently plague our nation.

Secondly, if you invest money in the stock market, invest in American businesses. Our country allows us a freedom of choice and I believe we should chose America first, plain and simple.

Now I realize how hard it may be to buy products not manufactured in Asia, but with a little effort and determination, quality American products can be sought out, purchased and summarily enjoyed with the result of you doing your part in aiding America in its economic recovery, thereby increasing the quality of life for us all.

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W. Alan Beckelheimer is a Crossville Chronicle staffwriter. His column appears each Wednesday in the Chronicle.