Posted By RichC on October 23, 2011
The new CPI numbers (Consumer Price Index) released by the government verify what most balancing family budgets already know … inflation is taking a bigger bite out of incomes. Most private sector workers feel fortunate just to be employed and have seen their take-home pay and benefits stagnate or retreat. Everyone I know has had their out of pocket healthcare cost go up significantly along with the cost of a post secondary education for their children. Those who work for the government seem to have been insulated from the downturn and are actually capitalizing on better salaries along with their generous healthcare benefits and pension plans (not to mention excessive vacation days and potential for earlier retirements).
The changing balance in compensation between the private sector and public sector has been a target of criticism this past year and is rearing its head once again as the Occupy Wall Street crowd rails over the high pay and control bankers have in our economy (among other incoherent issues). I have wondered why the focus is on those on Wall Street instead of on those who actually “bailed” out the banks and select companies? One would think that the real anger would be directed towards those who leech lucratively off the taxpayer, take the campaign contributions from the fat cats and divvy out loans, incentives and tax breaks based on lobby clout? Unfortunately the anger from protestors seems misguided.
For my fault in pointing out the public vs private worker warfare, this isn’t good for the country either. The continuing divide isn’t helpful in bringing back our economy or gaining control in our addition to borrowing and spending – both personal and government. I do think that all agree that the problem improves with a growing economy … unfortunately few agree with what the government can or should do to expedite our economic recovery.
Inflationdata.com chart showing inflation in the past decade (click for larger)
For now, we are faced with the real issue of rising prices. Some suggest that price increases are a sign that the demand is up and that the economy is improving. Other say that we aren’t on a growth path and that this is more than likely stagflation and based on placing a higher value on commodities than the U.S. dollar. Frankly, I’m not the only one pointing to our heavy borrowing (40 cents of every dollar the government spends) as a reason to be concerned. That said, if you haven’t noticed that fuel prices remain well above $3 gallon for gasoline and most necessities in the grocery store are much higher than last year while salaries and wages in the private sector remain flat, take closer look. (FBN/CPI Food inflation numbers in illustrations below).