Private Wages at Lowest in History
Today, Usa, Tribune-Review/Pittsburgh Tribune-Review
Paychecks from private business shrank to their smallest share of personal income in American history during the first quarter of this year.
At the same time, government-provided benefits -- from Social Security, unemployment insurance, food stamps and other programs -- rose to a record high during the first three months of 2010.
Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.
The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more- expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.
The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries. …